Question
Raynor Manufacturing purchases trees from Tree Nursery and processes them up to the split off point, where two products (paper and pencil casings) are obtained.
Raynor Manufacturing purchases trees from Tree Nursery and processes them up to the split off point, 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 the split off point to yield 30,000 sheets of paper and 30,000 pencil casings is $1,500. Raynor Manufacturing's accounting department reported no beginning inventories; however, ending inventory amounts reflected 1,000 sheets of paper in stock. QUESTION: What is the paper's production approximate cost per unit if the sales value at split off method is used?
| A) | $0.0250 | |
| B) | $0.030 | |
| C) | $0.0259 | |
| D) | $0.0150 | |
| E) | $0.01435 |
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