A. In order to calculate the total cost of Product S, we need to know how much of the joint costs will be allocated to Product S. In order to allocate joint costs based on the sales value at the split off point, we need to determine the sales value at the split off point for each item. For R it is $250,000 (2,500 units produced × $100). For S it is $400,000 (5,000 units × $80). For T it is $150,000 (7,500 × $20). In total this is $800,000, of which Product S is 50%. Therefore, 50% of the joint costs should be allocated to Product S. Joint costs were $720,000, so Product S receives $360,000. For the company it is more beneficial to process product S further because it gains greater incremental revenue after further production. Thus, we need to add the $150,000 of processing costs after the split off point to determine the total cost of Product S as $510,000.

B. This would be the total cost if the joint costs were allocated based on physical units.

C. This answer calculates the allocation of the joint costs by using the sales value at the split-off point based on actual sales.

D. This is the total cost of Product R.