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Prescott Lumber processes logs into grade A and grade B lumber. Logs cost $21,000 per load. The milling process produces 5,000 units of grade A with a market value of $70,000 and 15,000 units of grade B with a market value of $10,000. The cost of the milling process is $11,000 per load. If the costs of the logs and the milling process are allocated on the basis of units of output, what cost will be assigned to each product?

Prescott Lumber processes logs into grade A and grade B lumber. Logs cost $21,000 per load. The milling process produces 5,000 units of grade A with a market value of $70,000 and 15,000 units of grade B with a market value of $10,000. The cost of the milling process is $11,000 per load. If the costs of the logs and the milling process are allocated on the basis of units of output, what cost will be assigned to each product?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Prescott Lumber processes logs into grade A and grade B lumber. Logs cost $21,000 per load. The milling process produces 5,000 units of grade A with a market value of $70,000 and 15,000 units of grade B with a market value of $10,000. The cost of the milling process is $11,000 per load. If the costs of the logs and the milling process are allocated on the basis of units of output, what cost will be assigned to each product?
Transcribed Image Text:Prescott Lumber processes logs into grade A and grade B lumber. Logs cost $21,000 per load. The milling process produces 5,000 units of grade A with a market value of $70,000 and 15,000 units of grade B with a market value of $10,000. The cost of the milling process is $11,000 per load. If the costs of the logs and the milling process are allocated on the basis of units of output, what cost will be assigned to each product?
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