Question

Snake River Sawmill manufactures two lumber products from a joint milling process. The two products developed are mine support braces (MSB) and unseasoned commercial building lumber (CBL). A standard production run incurs joint costs of $380,000 and results in 68,000 units of MSB and 98,000 units of CBL. Each MSB sells for $2, and each unit of CBL sells for $10. Calculate the amount of joint cost allocated to commercial building lumber (CBL) on a physical-units basis. (Round the calculation of "Relative Proportion" to the nearest whole percent. Round your final answers to the nearest dollar amount.)

Answer 1

The joint cost allocated to Commercial Building Lumber (CBL) using a physical-units basis is $224,200, which is calculated by finding the proportion of total units that are CBL and then applying that percentage to the total joint costs.

Step-by-step explanation:

To allocate the joint costs to Commercial Building Lumber (CBL) using the physical-units basis, you first need to find the total number of units produced and then determine what percentage of these units are CBL.

Total units = MSB units + CBL units
= 68,000 MSB + 98,000 CBL
= 166,000 units

The relative proportion of CBL is:
Percentage of CBL = (CBL Units / Total Units) * 100
= (98,000 / 166,000) * 100
= 59%

The amount of joint cost allocated to CBL is then calculated by multiplying the total joint cost by the relative proportion of CBL:

Joint Cost Allocated to CBL = Total Joint Cost * (Percentage of CBL / 100)
= $380,000 * (59% / 100)
= $380,000 * 0.59
= $224,200 (rounded to the nearest dollar)

Answer 2

The amount of joint cost allocated to commercial building lumber (CBL) on a physical-units basis is $224,337.

Step-by-step explanation:

In the joint cost allocation using physical-units basis, costs will be allocated proportionately on the amount of physical unit produced.

There are 2 products in the join-production process, CBL are produced at 98,000 units, MSB are produced at 68,000 units. Thus, we have the below calculation:

- Total units produced = 98,000 + 68,000 = 166,000 units

- Cost allocated to CBL = 98,000/166,000 = 59.036%; Cost allocated to MSB = 68,000/166,000 = 40.964%

=> Joint-cost allocated to CBL is: 380,000 x 59.036% = $224,337.