A Sawmill Bought a Shipment of Logs for $40,000

question 137

Short Answer

A sawmill bought a shipment of logs for $40,000.When cut, the logs produced 1 million board feet of lumber in the following grades:
Type 1 - 400,000 bd.ft.priced to sell at $0.12 per bd.ft.
Type 2 - 400,000 bd.ft.priced to sell at $0.06 per bd.ft.
Type 3 - 200,000 bd.ft.priced to sell at $0.04 per bd.ft.
How much cost should be allocated to Type 1 and Type 2, respectively?
$\begin{array}{lll}& \underline{\text { Type 1} }& \underline{\text { Type 2 }} \\\text { A. } & \$ 16,000 & \$ 16,000 \\\text { B . }& \$ 13,333 & \$ 4,444 \\\text { C. } & \$ 40,000 & \$ 24,000 \\\text { D. } & \$ 24,000 & \$ 12,000 \\\text { E. } & \$ 24,000 & \$ 8,000\end{array}$

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Definitions:

Economic Activity

The total amount of production, distribution, and consumption of goods and services in an economy.

Standard Deviation

A statistical measure of the dispersion of a set of data from its mean, often used to quantify the risk of a financial instrument.

Variance

A measure of how much a set of numbers differ from their average value.

Dispersion

A statistical measure that describes the spread of values around the mean or average, indicating variability within a data set.