A granary allocates the cost of unprocessed wheat to the production of feed, flour, and starch. For the current period, unprocessed wheat was purchased for $320,000, and the following quantities of product and sales revenues were produced. Product Pounds Price per pound Feed 100,000 $ 1.60 Flour 72,000 2.50 Starch 40,000 1.50 How much of the $320,000 cost should be allocated to flour if the value basis is used

the cost that should be allocated to flour is $144,000

Explanation:

The computation is shown below:

Particulars    Total value

Feed       (100,000 × $1.60)  = $160,000

Flour        (72,000 × $2.50) = $180,000

Starch      (40,000 × $1.50) = $60,000

Total        $400,000

Now the allocation made to flour is

= $180,000 ÷ $400,000 × $320,000

= $144,000

Hence, the cost that should be allocated to flour is $144,000

d. $240,400

Explanation:

To calculate the Cost of Goods sold for the year we simply add the Opening Balance of Finished goods to the Cost of Goods for the year and then subtract the Finished goods balance at year end (ending).

That would be,

= 233,000 + 31,600 - 24,200

= $240,400

$240,400 is the Cost of Goods sold for the year so Option D is correct.