1) Which of the following statements regarding allocation bases is correct?

Group of answer choices

If possible, ability to bear should be used to determine the allocation base.

Fairness and equity is always the best way to determine cost allocation base.

Support departments will never have causal factors, thus should use benefits received as cost allocation base.

If possible, cause and effect should be used to determine the allocation base.

Causal factors will introduce inaccuracies in the product costs; they should never be used.

2) Balley, Inc. produces three milk products (all are main products) from a joint process costing $200,000. Data from the current period's operation follow:

UnitsSales PriceSeparableTotal Revenue After

Producedat Split-OffCostsfurther Processing

Regular5,000$5$10,000$ 40,000

Fat-free15,000716,000120,000

2%30,00085,000250,000

Which product(s) should be processed beyond the split-off point?

Group of answer choices

all of the products

Fat-free only

Regular and 2% only

Regular and Fat-free only

2% only