Question
Progressive Manufacturing purchases trees from Tree Nursery and processes them up to thesplitoffpoint, where two products (paper and pencil casings) are obtained. The products are
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Progressive Manufacturing purchases trees from Tree Nursery and processes them up to thesplitoffpoint, where two products (paper and pencil casings) are obtained. The products are then sold to an independent company that markets and distributes them to retail outlets. The following information was collected for the month of October.
Trees processed:
50 trees (yield is 30,000 sheets of paper and 30,000 pencil casings and no scrap)
Production: |
|
paper | 30,000 sheets |
pencil casings | 30,000 |
|
|
Sales: |
|
paper | 29,000 at $0.04 per page |
pencil casings | 30,000 at $0.10 per casing |
Cost of purchasing 50 trees and processing them up to thesplitoffpoint to yield 30,000 sheets of paper and 30,000 pencil casings is $1,500.
Progressive Manufacturing's accounting department reported no beginning inventories; however, ending inventory amounts reflected 1,000 sheets of paper in stock.
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What is the paper's sales value at thesplitoffpoint?
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What is the approximate cost assigned to the pencil casings if joint costs are allocated using the sales value atsplitoffmethod?
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Give three definitions of investment used in practice when computing Return on Investment.
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