Firm X has a production process that has a total joint cost of $26,000. At the...
Firm X has a production process that has a total joint cost of $26,000. At the split-off point, there are 2,000 pounds of Product 1 and 8,000 pounds of Product 2. What is the cost per pound of Product 1 using the physical measure method?
Multiple Choice
-
$2.10.
-
$2.60.
-
$3.10.
-
$3.60.
Homework Answers
Ans:
Under the physical measure method of allocation of cost to joint products, the total cost is divided by total quantity produced in order to arrive at the cost per unit
Total quantity produced
= Product 1 + Product 2
= 2,000 + 8,000
= 10,000 pounds
So, cost per pound
= Total cost / Total quantity
= $26,000 / 10,000
= $2.60 per pound
So, as per above discussion, option B is the correct option
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