A Lumber Mill Bought a Shipment of Logs for $40,000

question 2

Multiple Choice

A lumber mill bought a shipment of logs for $40,000. When cut, the logs produced a million board feet of lumber in the following grades. Compute the cost to be allocated to Type 1 and Type 2 lumber, respectively, if the value basis is used. 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.

• A) $40,000; $24,000.
• B) $24,000; $8,000.
• C) $13,333; $4,444.
• D) $24,000; $12,000.
• E) $16,000; $16,000.

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