Exhibit 7-9 Doughnuts Company Uses Flour to Produce Two Joint Products,Premium and Products,Premium

Multiple Choice

Exhibit 7-9
Doughnuts Company uses flour to produce two joint products,Premium and Deluxe.When processed,each pound of flour yields 8 units of Premium and 12 units of Deluxe.Premium doughnuts sell for $1.00 per unit and Deluxe sell for $2.00 per unit.The total cost to process a 10-pound batch of flour is $12.00.
-Refer to Exhibit 7-9.If the physical quantities method is used to allocate the $12 in joint costs,how much will be allocated to Premium doughnuts?

A) $10.00
B) $7.20
C) $6.00
D) $4.80
E) None of the answer choices is correct.