A Firm Incurs Manufacturing Costs Totalling $240 000 in Process

question 116

Multiple Choice

A firm incurs manufacturing costs totalling $240 000 in process 1 to produce the following three beverages emerging from that process at the split-off point.
Apple juice: sold immediately it emerges from Process 1 without further processing for $0.70 litre.
Apple cider: processed further in Process 2 at an additional cost of $0.66667 litre, then sold for $1.50 litre
Apple pulp: processed further in Process 3 at an additional cost of $1.50 litre, then sold for $3.50 litre.
The following data relates to the period in which the joint costs were incurred.
What is the amount of joint cost that would be allocated to apple juice if the net realisable value method had been used?

• A) $120 000
• B) $80 000
• C) $84 000
• D) $91 000

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