Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Timberland Pty Ltd manufactures two timber products from a joint milling process. The two products developed are mine support braces (MSB) and unseasoned commercial building
Timberland Pty Ltd manufactures two timber products from a joint milling process. The two products developed are mine support braces (MSB) and unseasoned commercial building lumber (CSL). A standard product run incurs joint costs of $400,000 and results in 50,000 units of MSB and 150,000 units of CBL. Each unit of MSB sells for $4 and each unit of CBL sells for $2.
Required:
- Calculate the amount of joint cost allocated to each product on a physical-units basis. (2 marks)
- Calculate the amount of joint cost allocated to each product on a relative-sales-value basis. (2 marks)
- Assume the commercial building lumber is not marketable at split-off but must be further planed and sized at a cost of $140,000 per production run. During this process, 10,000 units are unavoidably lost; these spoiled units have no value. The remaining units of commercial building lumber are saleable at $6 per unit. The mine support braces, although saleable immediately at the split-off point, are coated with a tarlike preservative that costs $50,000 per production run. The braces are then sold for $7 each. Using the net-realizable-value basis, calculate the amount of joint cost allocated to each product, and compute the completed cost assigned to each unit of commercial building lumber. (6 marks)
- If Timberland Pty Ltd chose not to process the mine support braces beyond the split-off point, the contribution from the joint milling process would increase or decrease by what amount? (5 marks)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started