The Silver Center (TSC) produces cups and platters. TSC purchases silver and other metals that are processed into silver alloy that is used to make platters and cups. TSC incurred $40,000 of materials cost and $44,000 of labor cost to produce the silver alloy. Platters are made first and the residual alloy is remixed into a lower grade silver plated material that is used to make the cups. Remixing cost amount to $2,000. The recent batch contained 4,000 platters and 1,000 cups. TSC sold the platters for $100,000 and the cups for $12,000. Based on this information the total amount of joint cost is?a. $67,200.b. $32,800.c. $12,000.d. $(4,800).

The total amount of joint cost is $32,800

Explanation:

Cost to be allocated ÷ Allocation base = Allocation rate

($40,000 + $44,000) ÷ (4,000 platters + 1,000 cups)

                               = $16.80 per unit

Allocation rate x Weight of the base = amount to allocate

$16.80 x 4,000 units = $67,200 to platters

$16.80 x 1,000 units = $16,800 to cups

                                                            Platters         Cups

Sales                                                  $ 100,000     $12,000

Allocated joint cost                             (67,200)      (16,800)

Further processing cost                          0              (2,000)

Income                                                $32,800      $(6,800)

d. low interest rates

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