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A movie production studio incurs joint costs in producing three films: Action, Comedy, and Drama. The studio spends $1,000,000 on joint costs. The films are
A movie production studio incurs joint costs in producing three films: Action, Comedy, and Drama. The studio spends $1,000,000 on joint costs. The films are split-off at the end of production, and each has a resale value. The resale values for Action, Comedy, and Drama are $500,000, $300,000, and $200,000, respectively. Discuss how the studio could allocate the joint costs among the films.
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