Lane Co. produces main products Kul and Wu. The process also yields by-product Zef. Net realizable value of by-product Zef is subtracted from joint production cost of Kul and Wu. The following information pertains to production in July 2005 at a joint cost of $54,000:
|
Product |
Units produced |
Market value |
Additional cost after split-off |
|
|
Kul |
1,000 |
$40,000 |
$ |
0 |
|
Wu |
1,500 |
35,000 |
0 |
|
|
Zef |
500 |
7,000 |
3,000 |
|
If Lane uses the net realizable value method for allocating joint cost, how much of the joint cost should be allocated to product Kul?
- $18,800
- $20,000
- $26,667
- $27,342