Question
Snake River Sawmill manufactures two lumber products from a joint milling process. The two products developed are mine support braces (MSB) and unseasoned commercial building
Snake River Sawmill manufactures two lumber products from a joint milling process. The two products developed are mine support braces (MSB) and unseasoned commercial building lumber (CBL). A standard production run incurs joint costs of $430,000 and results in 73,000 units of MSB and 103,000 units of CBL. Each MSB sells for $7, and each unit of CBL sells for $15.
a. Assume the commercial building lumber is not marketable at split-off but must be further planed and sized at a cost of $500,200 per production run. During this process, 11,300 units are unavoidably lost; these spoiled units have no value. The remaining units of commercial building lumber are saleable at $15.00 per unit. The mine support braces, although saleable immediately at the split-off point, are coated with a tarlike preservative that costs $230,000 per production run. The braces are then sold for $11.50 each. Using the net-realizable-value basis, compute the completed cost assigned to each unit of commercial building lumber. (Round the calculation of "Relative Proportion" to the nearest whole percent. Round your final answer to 2 decimal places.)
b. Calculate the amount of joint cost allocated to commercial building lumber (CBL) on a physical-units basis. (Round the calculation of "Relative Proportion" to the nearest whole percent. Round your final answers to the nearest dollar amount.)
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