A Dairy Allocates the Cost of Unprocessed Milk to the Production

question 67

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. 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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Definitions:

Intermediaries

Entities or individuals that act as middlemen between the producer and the consumer in the distribution process, facilitating transactions and logistics.

Manufacturers

Companies or individuals that produce goods for sale using raw materials and components through various processes.

Distribution Center

A facility that stores products for redistribution to retailers, wholesalers, or directly to consumers.

Retailers

Businesses or persons that sell goods directly to consumers.