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Londonderry Lumber Inc. (Londonderry) purchases logs from independent timber contractors and processes the logs into three types of lumber products. These products are the
Londonderry Lumber Inc. (Londonderry) purchases logs from independent timber contractors and processes the logs into three types of lumber products. These products are the result of a joint sawmill process that involves removal of bark from the logs, cutti the logs into a workable size, and then cutting the individual products from the logs. (Click the icon to view the joint cost information.) (Click the icon to view the per-unit information.) The studs are sold as rough-cut lumber after emerging from the sawmill operation without further processing by Londonderry. Also, the posts require no further processing beyond the splitoff point. The decorative pieces must be planed and further sized after emerging from the sawmill. This additional processing costs $100,000 per month and normally results in a loss of 10% of the units entering the process. Without this planing and sizing process, there is still an active intermediate market for the unfinished decorative pieces in which the selling price averages $70 per unit. Required i Joint cost information - X i Per-unit information The joint process results in the following costs of products for a typical month: . X places.) Product yields and average sales values on a per-unit basis from the joint process are as follows: Monthly Output of Materials at Fully Processed Direct materials (rough timber logs) Debarking (labour and overhead) $ 505,000 Product Splitoff Point 60,000 Studs 70,000 units Sizing (labour and overhead) Product cutting (labour and overhead) Total joint costs 210,000 Decorative pieces 2,000 units 265,000 Posts 22,000 units $ 1,040,000 Print Done Print Done Selling Price $ 8 110 28 ngs to four decimal places.)
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