Information About Three Joint Products Follows The Cost of the Joint Process Is $60,000

question 103

Multiple Choice

Information about three joint products follows: $$\begin{array} { l r r r } &A&B&C\\\text { Anticipated production } & 5,000 \mathrm {~kg} & 1,000 \mathrm {~kg} & 2,000 \mathrm {~kg} \\\text { Selling price/kg at split-off } & \$ 10 & \$ 30 & \$ 16 \\\text { Additional processing costs/kg after split-off } & & & \\\quad \text { (all variable) } & \$ 6 & \$ 12 & \$ 24 \\\text { Selling price/kg after further processing } & \$ 20 & \$ 40 & \$ 50\end{array}$$ The cost of the joint process is $60,000.Which of the joint products should be sold at split-off?

• A) joint product A
• B) joint product B
• C) joint product C
• D) none of the joint products

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Definitions:

Fixed Cost

Costs that do not vary with the volume of production or sales, such as rent, salaries, and insurance.

Relevant Activity Base

A factor that directly influences the costs incurred during a business activity, used for allocating costs in activity-based costing.

Decision-making Needs

The requirement for relevant, timely, and accurate information to make informed choices in business operations and strategies.

Variable Costs

Expenses that fluctuate in proportion to activity levels within a business.