Joint costs according to the proportion of units

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Reference no: EM13148631

A Company processes products in a joint processing operation that produces products A and B in a joint process, and by-product C. The company incurs $2,000,000 of joint processing costs monthly. Currently, 600 units of A, 800 units of B, and 100 units of C are being produced each month. Management plans to decrease B's production by 200 units in order to increase the production of A by 300 units. Output of by-product C will stay the same. This change in production will require additional joint production costs of $200,000.

What is the amount of the joint costs allocable to A before the changes are made to the existing production process assuming the company allocates its joint costs according to the proportion of units produced?

A) $800,000

B) $750,000

C) $1,200,000

D) None of the above

Reference no: EM13148631

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