A Dairy Allocates the Cost of Unprocessed Milk to the Production

question 121

Multiple Choice

A dairy allocates the cost of unprocessed milk to the production of milk,cream,butter and cheese.For the current period,unprocessed milk was purchased for $240,000,and the following quantities of product and sales revenues were produced.
$\begin{array}{lrr}&&\text {Price per}\\\text {Product}&\text {Pounds}&\text {Pound}\\\text { Milk } & 100,000 & \$ 0.90 \\\text { Cheese } & 50,000 & 2.20 \\\text { Butter } & 20,000 & 1.00 \\\text { Cream } & 10,000 & 3.00\end{array}$
How much of the $240,000 cost should be allocated to milk?

• A) $0
• B) $86,400
• C) $90,000
• D) $133,333
• E) $240,000

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