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Answer (A) is correct . The net realizable value (NRV) method is an appropriate method of allocation when products cannot be sold at split-off. Further processing of R, which is salable at split-off, is not economical because the cost of $150,000 exceeds the benefit [2,500 units × ($150 – $100) = $125,000]. Thus, R’s NRV is $250,000 (2,500 units × $100 price at split-off). However, S and T must be processed further. S’s NRV is $425,000 [(5,000 units × $115) – $150,000], and T’s NRV is $125,000 [(7,500 units × $30) – $100,000]. Given that the NRV of T is a reduction of joint cost, the total joint cost to be allocated is therefore $595,000 ($720,000 – $125,000 NRV of T). Accordingly, based on the NRV method, the joint cost allocated to R is $220,370 {[$250,000 R’s NRV ÷ ($250,000 R’s NRV + $425,000 S’s NRV)] × $595,000 allocable joint cost}. Because further processing of R is uneconomical, the total cost of R is $220,370.

Answer (B) is incorrect because The amount of $370,370 includes additional processing costs.
Answer (C) is incorrect because The amount of $374,630 is the joint cost allocated to S.
Answer (D) is incorrect because The amount of $595,000 is the allocable joint cost.