A Sawmill Processes Logs into Four Grades of Lumber Totaling

question 83

Multiple Choice

A sawmill processes logs into four grades of lumber totaling 500,000 board feet as follows at a joint cost of $300,000:
- What is the gross profit of No.3 common if the constant gross margin percentage method is used?

• A) $45,900
• B) $168,750
• C) $81,600
• D) $135,000

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Definitions:

Producer Surplus

The difference between what producers are willing to accept for a good or service versus what they actually receive, due to higher market prices.

Equilibrium Point

The point at which market supply and demand balance each other, and as a result, prices become stable.

S And D Curves

Stand for Supply and Demand curves, graphical representations in economics that illustrate the relationship between the quantity of goods available for sale and the quantity of goods that consumers are willing and able to buy at various prices.

Total Revenues

The entire amount of money received by a company from its business activities before any expenses are subtracted.