Pacific Lumber processes lumber products for sale to lumber wholesalers. its most popular line is oak products. Oak tree growers sell pacific lumber whole trees. These trees are jointly processed up to the splitoff point at which raw select oak, raw white oak, and raw knotty oak become separable products. Each raw product is then separartely further processed by Pacific Lumber into finished products (select oak, white oak, and knotty oak) that are sold to lumber wholesalers. Data for August 2015 are:

a. Joint processing costs (including cost of oak trees) --- $300,000

b. Separable product at splitoff point

- Raw select oak, 30,000 board-feet

- Raw white oak, 50,000 board-feet

- Raw knotty oak, 20,000 board-feet

d. Separable processing costs

- For select oak, $60,000

- For white oak, $90,000

- For knotty oak, $15,000

There is an active market for raw oak products. Selling prices available in August 2015 were raw select oak, $8 per board-foot; raw white oak, $4 per board-foot; and raw knotty oak, $3 per board-foot. There were no beginning or ending inventories for August 2015.

Required:

1. Allocate the joint costs to the three products using

a. Sales value at splitoff method

b. Physical-measures method

c. NRV method

2. Assume that not all final products produced in August 2015 were sold. Ending inventory for August 2015 was select oak, 1,000 board-feet, white oak 2,000 board-feet; and knotty oak, 500 board-feet. What would be the ending inventory values in the August 30 balance sheet under porduct for the three methods in requirment 1?

3. Is Pacific Lumber maximizing its total 2015 operating income by fully processing each raw oak product into its finished product form? Show your computations.