[Ail Bane]

I had a problem on this question.

General Chemical produced 10,000 gallons of Green and 20,000 gallons of Blue. Joint costs incurred in producing the two products totaled $7,500. At the split off point, Green has a market val of $6 per gal and Blue has $2 per gal. What portion of the joint costs should be allocated to Green if the basis is market value at the point of separation?

I thought it was either 1500 or 3000 but any help or pointers are appreciated. Thanks.

[CaptainForest]

If you are going to attribute the joint costs of $7,500 based on market value……

Since Green has a value of 6 and Blue 2, then Green should be attributed 6/8 of the total value.

So Green should get 6/8 x 7,500 = $5,625 and Blue should get the remaining 2/8 or $1,875