Use the Information Below to Answer the Following Question(s)

question 190

Multiple Choice

Use the information below to answer the following question(s) .Raynor Manufacturing purchases trees from Tree Nursery and processes them up to the splitoff point, where two products (paper and pencil casings) are obtained.The products are then sold to an independent company that markets and distributes them to retail outlets.The following information was collected for the month of October.Trees processed:
50 trees (yield is 30,000 sheets of paper and 30,000 pencil casings and no scrap)
Cost of purchasing 50 trees and processing them up to the splitoff point to yield 30,000 sheets of paper and 30,000 pencil casings is $1,500.Raynor Manufacturing's accounting department reported no beginning inventories; however, ending inventory amounts reflected 1,000 sheets of paper in stock.
-What is the approximate production cost per unit for each pencil casing if the sales value at splitoff method is used?

• A)$0.0250
• B)$0.0255
• C)$0.0335
• D)$0.0357
• E)$0.0533

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Definitions:

Inflation

The rate at which the general level of prices for goods and services is rising.

Holding-Period Return

The total return received from holding an asset or portfolio of assets over a period of time, considering both price appreciation and dividends or interest.

Dividend

Payments made by a corporation to its shareholders, usually as a distribution of profits.