Problem 3 - Oregon Lumber processes timber into four products. During January, t
ID: 2352125 • Letter: P
Question
Problem 3 - 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
Splitoff 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
67. Product Boardfeet Sales Value Percent Joint Cost Allocated ------- --------- ----------- ------- ---------- --------- 2 x 4's 6,000,000 $1,800,000 45.0% x $280,000 $126,000 2 x 6's 3,000,000 1,200,000 30.0 x 280,000 84,000 4 x 4's 2,000,000 900,000 22.5 x 280,000 63,000 slabs 1,000,000 100,000 2.5 x 280,000 7,000 ---------- ------ -------- Totals $4,000,000 100.0% $280,000 ========== ====== ======== Product Fraction of Prod. in Inventory Allocated Inventory value ------- ------------------------------ --------- --------------- 2 x 4's 500,000/6,000,000 x $126,000 = $10,500 2 x 6's 250,000/3,000,000 x 84,000 = 7,000 4 x 4's 100,000/2,000,000 x 63,000 = 3,150 slabs 50,000/1,000,000 x 7,000 = 350 ------- Total $21,000 15:74
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