Bevo Beef Company Uses the Relative Market Value Method of Allocating

question 107

Multiple Choice

Bevo Beef Company uses the relative market value method of allocating joint costs in their production of beef products. Relevant information for the current period follows:
$\begin{array}{lrr}\text { Product } & \begin{array}{c}\text { Production in } \\\text { Pounds }\end{array} & \begin{array}{c}\text { Market } \\\text { Price/lb. }\end{array}\\\hline\text { Sirloin } & 3,000 & \$ 5.00 \\\text { Hamburger } & 10,000 & 2.00 \\\text { Rib eye } & 4,000 & 4.75 \\\text { Roast } & 6,000 & 3.50\end{array}$
The total joint cost for the current period was $43,000. How much of this cost should Bevo Beef allocate to sirloin?

• A) $0
• B) $5,909
• C) $8,600
• D) $10,750
• E) $43,000

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Definitions:

Period Costs

Expenses that are not directly tied to the production of goods or services and are expensed within the period they occur.

Production Process

The sequence of operations or activities involved in converting materials into finished goods or services.

Balance Sheet

A financial statement that provides a snapshot of a company's financial position at a specific point in time, showing assets, liabilities, and equity.

Continuous Improvement

An ongoing effort to improve products, services, or processes through incremental and breakthrough improvements.