Question
(1) Firm B has spent $25,000 on a process during a month and produced1000 (fully complete) units, hence the average cost per unit is $25.
(1)
Firm B has spent $25,000 on a process during a month and produced1000 (fully complete) units, hence the average cost per unit is $25.
If 700 of these units are sold the cost of goods sold will be $25 x 700 =$17,500.This is relatively straightforward because of the absence of work-in-process inventory.
Instead assume firm B has spent $25,000 producing 850 fully complete units and has another 150 which are only 60% complete.
Again assuming 700 (fully complete) units are sold,what is the cost of goods sold now?
(2)
Cygnet Sawmill manufactures two timber products from a joint milling process. The two products are mine support braces (MSB) and lengths of unseasoned commercial building timber (CBT).
A standard production run incurs joint costs of $750 000 and results in 60,000 units of MSB and 90,000 lengths of CBT. Each MSB sells for $5, and each length of CBT sells for $10.
Requirement 1 only:
Calculate the amount of joint cost allocated to the CBT on a physical units basis.
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