Joint Products Northwest Building Products (NBP) manufactures two lumber products from ajoint milling process: residential building lumber (RBL) and commercial building lumber (CBL).A standard production run incurs joint costs of $450,000 and results in 80,000 units of RBL and120,000 units of CBL. Each RBL sells for $10 per unit and each CBL sells for $12 per unit.Required1. Assuming that no further processing occurs after the split-off point, how much of the joint costs areallocated to commercial lumber (CBL) on a physical measure method basis?2. If no further processing occurs after the split-off point, how much of the joint cost is allocated to theresidential lumber (RBL) using a sales value at split-off method?3. Assume that the CBL is not marketable at split-off but must be planed and sized at a cost of $300,000 perproduction run. During this process, 10,000 units are unavoidably lost and have no value. The remainingunits of CBL are salable at $14 per unit. The RBL, although salable immediately at the split-off point, iscoated with a tarlike preservative that costs $200,000 per production run. The RBL is then sold for $12each. Using the net realizable value basis, how much of the completion costs should be assigned to eachunit of CBL?
Joint Products Northwest Building Products (NBP) manufactures two lumber products from a
joint milling process: residential building lumber (RBL) and commercial building lumber (CBL).
A standard production run incurs joint costs of $450,000 and results in 80,000 units of RBL and
120,000 units of CBL. Each RBL sells for $10 per unit and each CBL sells for $12 per unit.
Required
1. Assuming that no further processing occurs after the split-off point, how much of the joint costs are
allocated to commercial lumber (CBL) on a physical measure method basis?
2. If no further processing occurs after the split-off point, how much of the joint cost is allocated to the
residential lumber (RBL) using a sales value at split-off method?
3. Assume that the CBL is not marketable at split-off but must be planed and sized at a cost of $300,000 per
production run. During this process, 10,000 units are unavoidably lost and have no value. The remaining
units of CBL are salable at $14 per unit. The RBL, although salable immediately at the split-off point, is
coated with a tarlike preservative that costs $200,000 per production run. The RBL is then sold for $12
each. Using the net realizable value basis, how much of the completion costs should be assigned to each
unit of CBL?
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 3 images
