A Firm Produces Three Items from a Single Process in Batches

question 82

Multiple Choice

A firm produces three items from a single process in batches containing 40 units A (a by-product) ; 100 units B; 100 units C. Separable costs and selling prices are:

Joint process costs are $30 000 per batch.
What is the amount of joint costs that would be allocated to B using the net realisable value method and treats by-product revenue as a reduction of the cost of the principal products?

• A) $7000
• B) $7500
• C) $15 000
• D) $14 000

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Definitions:

Referendum

A direct vote in which an entire electorate is asked to vote on a particular proposal and can have wide-ranging implications.

Initiative

A process that allows citizens to propose and vote on legislation directly, bypassing the legislative body.

Boss System

A political system dominated by a single leader or group of leaders (bosses) who have enough power to control political appointments, the distribution of favors, and the outcome of elections.

Civil Rights

The rights of individuals to receive equal treatment (and to be free from unfair treatment or discrimination) in a number of settings – including education, employment, housing, and more – based on certain legally-protected characteristics.