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 $310,000, and the following quantities of product and sales revenues were produced. Product Pounds Price per Pound Feed 150,000 $ 1.40 Flour 55,000 2.70 Starch 25,000 6.00 How much of the $310,000 cost should be allocated to feed if the value basis is used

$98,973.77

Explanation:

The computation of the amount allocated to feed while using the value basis is shown below:

But before that first we have to find out the total cost which is

Feed(100,000 × $1.40) = $140,000

Flour(55,000 × $2.70) = 148,500

Starch(25,000 × 6) = 150,000

Total438,500

Now the allocated value is

= 140,000 ÷ 438,500 × $310,000

= $98,973.77

We simply do the above calculations

answer; is usually (less than) the socially optimal level of consumption;