How much are the joint costs allocated to two-by-fours

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Problem

Selection Lumber Mills Inc. produces lumber from farmed trees. Raw logs are delivered to the company's plant, where they are processed up to the split-off point into three products: two-by-four lumber, two-by-six lumber, and two-by-12 lumber. Lumber is sold by the foot, board measure (FBM), which is a common standard in the industry. The joint costs of this process are $60,000, resulting in the following output: Product Units Selling price per FBM Two-by-four 105,000 FBM $0.40 Two-by-six 60,000 FBM $0.50 Two-by-12 40,000 FBM $0.70 Each of these products can be further refined through a process that smooths the board by running it through a planer. Get the instant assignment help. While the output remains the same, this process increases the production cost and the sales value of the output as follows: Product Further processing costs Finished selling price per FBM Two-by-four $20,000 $0.50 Two-by-six $12,000 $0.82 Two-by-12 $13,000 $0.85 Using the sales value at split-off method, how much are the joint costs allocated to two-by-fours?

Reference no: EM133919905

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