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Sawmill, Inc. processes wood pulp into three grades of plywood: Hardwood, Softwood, and Decorative. Each grade of plywood may be sold as is at the
Sawmill, Inc. processes wood pulp into three grades of plywood: Hardwood, Softwood, and Decorative. Each grade of plywood may be sold as is at the split-off point or processed further to a higher grade of product, with the price and cost information shown below. The joint processing cost to get the wood pulp to split-off is $16,000. Sawmill, Inc. desires to maximize its profit by making an optimal sell-or-process-further decision for each grade of plywood, and also allocate its joint costs according to such decisions. Selling price Cost after per board-feet split-off Selling price Board-feet per board-feet Product produced feet) after split-off at split-off (per board- 2,500 $5.5 $2.0 Hardwood $8.0 3,000 3.0 1.5 Softwood 5.0 4,500 7.0 3.5 Decorative 10.0 How much joint cost would be allocated to Softwood plywood if the Net Realizable Value method was used (Round numbers to 4 decimal places if needed & choose the closest value to your answer!)? $4,211.2 $2,947.2 $8,841.6 $3,068.8
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