Answer (D) is correct . Joint cost is $93,000 and Morefeed has a split-off value of $3,000 (1,000 pounds ¡Á $3 split-off value per pound). Assuming the latter amount is treated as a reduction in joint cost, the allocable joint cost is $90,000. The total physical quantity (volume) of the two joint products is 15,000 pounds (10,000 Alfa + 5,000 Betters). Hence, $60,000 of the net joint costs [(10,000 ¡Â 15,000) ¡Á $90,000] should be allocated to Alfa.<
Answer (A) is incorrect because The figure of $3,000 is the value of the by-product.
Answer (B) is incorrect because The figure of $30,000 is based on the net realizable value method.
Answer (C) is incorrect because The figure of $31,000 is based on the net realizable value method and fails to adjust the joint processing cost for the value of the by-product.
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Assuming Atlas Foods inventories Morefeed, the by-product, the joint cost to be allocated to Alfa, using the physical quantity method is
