Bismite Corporation purchases trees from Cheney lumber and processes them up to the splitoff point where two products (paper and pencil casings) are obtained. The products are then sold to an independent company that markets and distributes them to retail outlets. The following information was collected for the month of October: Trees processed. Production. Sales. 250 trees paper pencil casings paper pencil casings 500,000 sheets 250,000 400,000 at $0.10 per page 250,000 at $0.20 per casing The cost of purchasing 250 trees and processing them up to the splitoff point to yield 500,000 sheets of paper and 250,000 pencil casings is $20,000. Bismite's accounting department reported no beginning inventory. a) What is the total sales value at the splitoff point for paper? b) What is the total sales value at the splitoff point of the pencil casings? d) If the sales value at splitoff method is used, what is the approximate production cost for each pencil casing? e) If the sales value at splitoff method is used, what is the approximate production cost for each paper sheet? f) If the sales value at splitoff method is used, what are the approximate joint costs assigned to ending inventory for paper?

Bismite Corporation purchases trees from Cheney lumber and processes them up to the splitoff point where two products (paper and pencil casings) are obtained. The products are then sold to an independent company that markets and distributes them to retail outlets. The following information was collected for the month of October: Trees processed. Production. Sales. 250 trees paper pencil casings paper pencil casings 500,000 sheets 250,000 400,000 at $0.10 per page 250,000 at $0.20 per casing The cost of purchasing 250 trees and processing them up to the splitoff point to yield 500,000 sheets of paper and 250,000 pencil casings is $20,000. Bismite's accounting department reported no beginning inventory. a) What is the total sales value at the splitoff point for paper? b) What is the total sales value at the splitoff point of the pencil casings? d) If the sales value at splitoff method is used, what is the approximate production cost for each pencil casing? e) If the sales value at splitoff method is used, what is the approximate production cost for each paper sheet? f) If the sales value at splitoff method is used, what are the approximate joint costs assigned to ending inventory for paper?

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter20: Inventory Management: Economic Order Quantity, Jit, And The Theory Of Constraints

Section: Chapter Questions

Problem 2CE: Sterling Corporation has an EOQ of 5,000 units. The company uses an average of 500 units per day. An...

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