Laredo Manufactures Nuts and Bolts from a Joint Process (Cost

question 69

Multiple Choice

Laredo manufactures Nuts and Bolts from a joint process (cost = $80,000) . Five thousand pounds of Nuts can be sold at split-off for $20 per pound; ten thousand pounds of Bolts can be sold at split-off for $15 per pound. For product costing purposes Laredo allocates joint costs using the relative sales value method.
The amount of joint cost allocated to Nuts would be:

• A) $32,000.
• B) $40,000.
• C) $48,000.
• D) $60,000.
• E) $80,000.

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Definitions:

Tax

A financial charge or levy imposed by a government on individuals or entities, primarily used to fund public expenditures.

Deadweight Loss

Economic inefficiency created by a divergence from the optimal market equilibrium, often caused by taxes, subsidies, or other market interventions.

Beer

An alcoholic beverage made from the fermentation of cereal grains, primarily barley, with hop additions for flavor.

Milk

A nutrient-rich liquid food produced by the mammary glands of mammals, commonly consumed by humans as a beverage or used in dairy products.