Physical measure allocation and sell or process further Oregon Forests uses a joint process to manufacture two grades of wood: A and B. During October, the company incurred $38,880,000 of joint production cost in producing 64,800,000 board feet of Grade A and 21,600,000 board feet of Grade B lumber. The company allocates joint cost on the basis of board feet of lumber produced. The company can sell Grade A lumber at the split-off point for $0.70 per board foot and Grade B lumber at the split-off point for $0.50 per board foot. Alternatively, Grade A lumber can be further processed at a cost of $0.75 per board foot and then sold for $1.50 per board foot. No opportunity exists for processing Grade B lumber after split-off. a. How much joint cost should be allocated to Grade A and to Grade B lumber using the physical units method? Grade A $ 0 Grade B $ 0 b. 1. If Grade A lumber is processed further and then sold, what is the incremental effect on Oregon Forests' net income? Processing further will result in an 2. Should the additional processing be performed? $ 0

Physical measure allocation and sell or process further Oregon Forests uses a joint process to manufacture two grades of wood: A and B. During October, the company incurred $38,880,000 of joint production cost in producing 64,800,000 board feet of Grade A and 21,600,000 board feet of Grade B lumber. The company allocates joint cost on the basis of board feet of lumber produced. The company can sell Grade A lumber at the split-off point for $0.70 per board foot and Grade B lumber at the split-off point for $0.50 per board foot. Alternatively, Grade A lumber can be further processed at a cost of $0.75 per board foot and then sold for $1.50 per board foot. No opportunity exists for processing Grade B lumber after split-off. a. How much joint cost should be allocated to Grade A and to Grade B lumber using the physical units method? Grade A $ 0 Grade B $ 0 b. 1. If Grade A lumber is processed further and then sold, what is the incremental effect on Oregon Forests' net income? Processing further will result in an 2. Should the additional processing be performed? $ 0

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter6: Process Cost Accounting—additional Procedures; Accounting For Joint Products And By-products

Section: Chapter Questions

Problem 12E: Adirondack Bat Co. processes rough timber to obtain three grades of lumber, A, B, and C that are...

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