Oregon Lumber processes timber into four products. During January, the joint cos
ID: 2351887 • Letter: O
Question
Oregon Lumber processes timber into four products. During January, the joint costs of processing were $280,000. There was no inventory at the beginning of the month. Production and sales value information for the month is as follows:---------------------------------------[--------------Sales Value at-----------------]
Product-------------Board feet----------Split-off Point------------Ending Inventory
2 x 4's--------------6,000,000----------$0.30 per board foot-------500,000 bdft.
2 x 6's--------------3,000,000-----------0.40 per board foot-------250,000 bdft.
4 x 4's--------------2,000,000-----------0.45 per board foot-------100,000 bdft.
Slabs---------------1,000,000-----------0.10 per board foot--------50,000 bdft.
Question: Determine the value of ending inventory if the sales value at splitoff method is used for product costing. Round to three decimal places when necessary. (10 points)
Explanation / Answer
Cost Allocation:
Board feet
Splitoff Point
Sales Value
Percent
Allocated cost
2 x 4's
6,000,000
$0.30 per board foot
$ 1,800,000.00
45%
$ 126,000.00
2 x 6's
3,000,000
0.40 per board foot
$ 1,200,000.00
30%
$ 84,000.00
4 x 4's
2,000,000
0.45 per board foot
$ 900,000.00
23%
$ 63,000.00
Slabs
1,000,000
0.10 per board foot
$ 100,000.00
3%
$ 7,000.00
$ 4,000,000.00
$ 280,000.00
============
Fraction of Product in Inventory
Value of Ending Inventory
2 x 4's
8%
$ 10,500.00
2 x 6's
8%
$ 7,000.00
4 x 4's
5%
$ 3,150.00
Slabs
5%
$ 350.00
$ 21,000.00
Cost Allocation:
Board feet
Splitoff Point
Sales Value
Percent
Allocated cost
2 x 4's
6,000,000
$0.30 per board foot
$ 1,800,000.00
45%
$ 126,000.00
2 x 6's
3,000,000
0.40 per board foot
$ 1,200,000.00
30%
$ 84,000.00
4 x 4's
2,000,000
0.45 per board foot
$ 900,000.00
23%
$ 63,000.00
Slabs
1,000,000
0.10 per board foot
$ 100,000.00
3%
$ 7,000.00
$ 4,000,000.00
$ 280,000.00
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.