Laredo Manufactures Nuts and Bolts from a Joint Process (Cost

question 80

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 and Bolts, respectively, would be:

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

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Definitions:

APC

The average propensity to consume, which is the proportion of income that is spent on consumption rather than saved.

Disposable Income

Financial allocations for households' spending and saving activities post-income tax deductions.

Savings

Funds that are set aside for future use rather than being spent immediately, often placed in accounts that earn interest.

Consumption

The use of goods and services by households or individuals, typically referring to the final use that directly satisfies human needs or wants.