38. The accounting rate of return is based on cash flows rather than net income in its calculation.

True or False

40.

A lumber mill paid $70,000 for logs that produced 200,000 board feet of lumber in 3 different grades and amounts as follows:

Grade	Production			Market Price
Structural	25,000	board feet		$	1,350/1,000	bd. ft.
No. 1 Common	75,000	board feet		$	750/1,000	bd. ft.
No. 2 Common	100,000	board feet		$	300/1,000	bd. ft.

Compute the portion of the $70,000 joint cost to be allocated to No. 2 Common if the value basis is used.

Multiple Choice

• $35,000.

• $23,333.

• $70,000.

• $17,500.

• $0.