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Yakima Manufacturing purchases trees from Cascade Lumber and processes them up to the split off point where two products (paper and pencil casings) are obtained.
Yakima Manufacturing purchases trees from Cascade Lumber 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 November:
Trees processed: 50 trees
Production: | paper | 38,000 pages | ||
pencil casings | 29,000 casings | |||
by-product | coarse saw dust | 2 tons | ||
Sales price: | paper | $0.04 per page | ||
pencil casings | $0.10 per casing | |||
coarse saw dust | $30.00 per ton | |||
The cost of purchasing 50 trees and processing them up to the split off point is $1,500.
How much of the joint costs are allocated to to by-products using the sales method?
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