Allocating Joint Costs Sonimad Sawmill Manufactures Two Lumber Products from a Joint Milling

question 2

Essay

Allocating joint costs
Sonimad Sawmill manufactures two lumber products from a joint milling process.The two products developed are mine support braces (MSBs)and unseasoned commercial building lumber (CBL).A standard production run incurs joint costs of $300,000 and results in 60,000 units of MSB and 90,000 units of CBL.Each unprocessed unit of MSB sells for $2 per unit and each unprocessed unit of CBL sells for $4 per unit.
If the CBL is processed further at a cost of $200,000,it can be sold at $10 per unit but 10,000 units are unavoidably lost (with no discernible value).The MSB units can be coated with a preservative at a cost of $100,000 per production run and then sold for $3.50 each.
Required:
a.If no further work is done after the initial milling process,calculate the cost of CBL using physical quantities to allocate the joint cost.
b.If no further work is done after the initial milling process,calculate the cost of MSB using relative sales value to allocate the joint cost.
c.Should MSB and CBL be processed further or sold immediately after initial milling?
d.Given your decision in (c),prepare a schedule computing the completed cost assigned to each unit of MSB and CBL as charged to finished goods inventory.Use net realizable value for allocating joint costs.

---

Definitions:

Bicuspid Valve

A valve in the heart that has two cusps or flaps, and controls blood flow between the left atrium and the left ventricle; also known as the mitral valve.

Sinoatrial Node

The heart's natural pacemaker, located in the right atrium, responsible for initiating the heart's contractions.

Atrioventricular Node

A part of the electrical conduction system of the heart that helps regulate the heart rate by transferring signals from the atria to the ventricles.

Atrioventricular Bundle

A group of heart muscle fibers responsible for conducting impulses from the atria to the ventricles, ensuring coordinated heart contractions.