Differential Chemical Produced 10,000 Gallons of Preon and 20,000 Gallons

Multiple Choice

Differential Chemical produced 10,000 gallons of Preon and 20,000 gallons of Paron. Joint costs incurred in producing the two products totaled $7,500. At the split-off point, Preon has a market value of $6.00 per gallon and Paron $2.00 per gallon. Compute the portion of the joint costs to be allocated to Preon if the value basis is used.

A) $1,500.
B) $3,000.
C) $2,500
D) $4,500.
E) $5,625.