Question

Yakima Manufacturing purchases trees from Cascade Lumber and processes them up to the split off point...

Yakima Manufacturing purchases trees from Cascade Lumber and processes them up to the split off 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 November:

Trees processed: 50 trees

Production: paper 38,000 pages
pencil casings 29,000 casings
by-product coarse saw dust 2 tons
Sales price: paper $0.04 per page
pencil casings $0.10 per casing
coarse saw dust $30.00 per ton

The cost of purchasing 50 trees and processing them up to the split off point is $1,500.

How much of the joint costs are allocated to to by-products using the sales method?

Business   Accounting   
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Answer #1
Calculation of the joint costs are allocated to to by-products using the sales method
Sales value at the splitoff point for paper $             1,520
(38000*0.04)
Sales value at the splitoff point of the pencil casings $             2,900
(29000*0.1)
Sales value at the splitoff point of the coarse saw dust $                  60
(30*2)
Joint costs assigned to ending inventory for paper $             20.09
60/(1520+2900+60)*1500
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