The Silver Center (TSC) produces cups and platters. TSC purchases silver and other metals that are processed into silver alloy that is used to make platters and cups. TSC incurred $40,000 of materials cost and $44,000 of labor cost to produce the silver alloy. Platters are made first and the residual alloy is remixed into a lower grade silver plated material that is used to make the cups. Remixing cost amount to $2,000. The recent batch contained 4,000 platters and 1,000 cups. TSC sold the platters for $100,000 and the cups for $12,000. If number of units is used to allocate the joint cost, what is the income earned for platters?

a. $67,200.
b. $32,800.
c. $12,000.
d $(4,800).

Income Earned for platters=$32,800

Option B is Correct ($32,800)

Explanation:

First we will calculate the cost Allocated to both cups and platter:

Allocation rate=

Allocation rate=

Allocation rate=$16.8

Amount Allocated for Platters= Units of platter* Allocation rate

Amount Allocated for Platters= 4000*$16.8

Amount Allocated for Platters= $67,200.

Calculating Income for platters:

Sales of platters=$100,000

Remixing Cost for platters= $0

Income Earned for platters=Sales of platters-Amount Allocated for Platters-Remixing Cost for platters

Income Earned for platters=$100,000-$67,200-$0

Income Earned for platters=$32,800

Option B is Correct ($32,800)

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