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. An independent timber contractor supplies logs to Kayu Sempurna Bhd. (KSB) and KSB processes them into three different types of lumber products: Decorative items

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. An independent timber contractor supplies logs to Kayu Sempurna Bhd. (KSB) and KSB processes them into three different types of lumber products: Decorative items (fireplace mantels, beams for ceilings) Posts that are used as support braces (mine support braces, braces for exterior fences on ranch properties) Residential building studs (walls, ceilings) These products are the result of a joint sawmill process that includes removing the bark from the logs, cutting the logs into workable lengths (ranging from 8 to 16 feet), and then cutting the individual products from the logs. The joint process results in the following costs of products for a typical month: RM Direct materials (rough timber logs) 560,000 Debarking (labour and overhead) 50,000 Sizing (labour and overhead) 170,000 Product cutting (labour and overhead) 230.000 Total joint costs 1.010,000 Product yields and average sales values on a per-unit basis from the joint process are as follows: Product Decorative items Posts Studs Monthly Output of Materials at Splitoff Point 5,500 units 18,500 units 77,000 units Fully Processed Selling Price (RM) 85 25 5 After leaving the sawmill, the stude an eala 5 After leaving the sawmill, the studs are sold as rough-cut lumber without further processing by KSB. Furthermore, the posts require no further processing after the splitoff point. After leaving the sawmill the decorative items must be planed and sized further. This extra processing costs RM90,000 per month and typically results in a 10% loss of the units entering the process. There is still an active intermediate market for unfinished decorative items without this planning and sizing process, with a selling price of RM55 per unit. Required: a) Based on the information given for KSB, allocate the joint processing costs of RM1,010,000 to the three products using: i. Sales value at splitoff method (5 marks) ii. Physical measure method (volume in units) (4 marks) Net Realisable Value (NRV) method (6 marks) b) Prepare an analysis for KSB that compares processing the decorative items further, as it currently does, with selling them as a rough-cut product immediately at splitoff. (5 marks) 111. ITOTAL101

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