McBride's Dairy has 200 gallons of cream and 600 gallons of skimmed milk and has incurred $1,000 of joint costs at the split-off point. The amount of this cost that will be allocated to cream using the physical units method is

A) $1,000
B) $750
C) $250
D) $0

Question

TaShi Phuntsho · Accepted Answer

Final Answer : C, Explanation :  The physical units method allocates joint costs based on the proportion of physical units. Here, cream represents 200 gallons out of a total of 800 gallons (200 gallons of cream + 600 gallons of skimmed milk), so it gets 25% (200/800) of the $1,000 joint costs, which is $250.

McBride's Dairy has 200 gallons of cream and 600 gallons of skimmed milk and has incurred $1,000 of joint costs at the split-off point. The amount of this cost that will be allocated to cream using the physical units method is

A) $1,000
B) $750
C) $250
D) $0

Definitions

Learning Objectives

Learning Objectives

Related questions

McBride's Dairy has 200 gallons of cream and 600 gallons of skimmed milk and has incurred $1,000 of joint costs at the split-off point. The amount of this cost that will be allocated to cream using the physical units method isA) $1,000B) $750C) $250D) $0

Definitions

Learning Objectives

Learning Objectives

Related questions

McBride's Dairy has 200 gallons of cream and 600 gallons of skimmed milk and has incurred $1,000 of joint costs at the split-off point. The amount of this cost that will be allocated to cream using the physical units method is

A) $1,000
B) $750
C) $250
D) $0