Benjamin Company produces two products from a joint process: X and Z. Joint processing costs for this production cycle are $8,000.

Yards

Sales price

per yard at

split-off

Disposal

cost per yard at

split-off

Further

processing

per yard

Final sale

price per

yard

X 1,500 $6.00 $3.50 $1.00 $7.50

Z 2,200 9.00 5.00 3.00 11.25

If X and Z are processed further, no disposal costs will be incurred or such costs will be borne by the buyer. Refer to Benjamin Company. Using sales value at split-off, what amount of joint processing cost is allocated to Product Z (round to the nearest dollar)?

Select one:

a. $4,757

b. $4,000

c. $5,500

d. $2,500

2

Oregon Forests uses a joint process to manufacture two grades of wood: A and B.

During October, the company incurred $48,600,000 of joint production cost in

producing 81,000,000 board feet of Grade A and 27,000,000 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 $Answer

Grade B $Answer

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 Answer $Answer

2. Should the additional processing be performed? Answer

Please answer all parts of the question.