Watrus Manufacturing Co

Multiple Choice

Watrus Manufacturing Co. makes three products, 1, 2, and 3, all of which are joint products, and products 4, which is classified as a by-product. If joint manufacturing costs amount to $600,000 and the company is using a popular accounting method, the firm will:

A) allocate $600,000 among 1, 2, and 3.
B) allocate $600,000 among 1, 2, 3, and 4.
C) increase $600,000 by the net realizable value of 4 and then allocate the total among 1, 2, and 3.
D) decrease $600,000 by the net realizable value of 4 and then allocate the total among 1, 2, and 3.
E) decrease $600,000 by the net realizable value of 4 and then allocate the total among 1, 2, 3, and 4.