Differential chemical produced 10,000 gallons of preon and 20,000 gallons of paron. joint costs incurred in producing the two products totaled $7,500. at the split-off point, preon has a market value of $6.00 per gallon and paron $2.00 per gallon. compute the portion of the joint costs to be allocated to preon if the value basis is used. a. $2,500. b. $3,000. c. $4,500. d. $5,625. e. $1,500.

C. $4,500

Explanation:

The portion of the joint cost for Preon allocation is shown below:

= Total joint cost for two products × (Preon cost ÷ Total cost)

where,

Total joint cost = $7,500

Preon cost = 10,000 gallons × $6 per gallon = $60,000

And, the total cost is

= 10,000 gallons × $6 per gallon + 20,000 gallons × $2 per gallon

= $60,000 + $40,000

= $100,000

So, the allocated cost equal to

= $7,500 × ($60,000 ÷ $100,000)

= $4,500

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answerangel investor;