Hampton Lumber Mills Inc. produces lumber from farmed trees. Raw logs are delivered to the company's...

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Hampton Lumber Mills Inc. produces lumber from farmed trees. Raw logs are delivered to the company's plant where they are processed up to the split-off point into three products: two-by-four lumber, two-by-six lumber and two-by-twelve lumber. Lumber is sold by the FBM (foot board measure), which is a common standard in the industry. The joint costs of this process are $60,000, resulting in the following output: Selling price per FBM $0.30 $0.55 $0.70 Product Two-by-four Two-by-six Two-by-twelve Each of these products can be further refined by going through a process that smooths the board by running it through a planer. This additional process causes a decrease in the saleable output for each product by 1%. This process also increases the production cost and the sales value of the output as follows: (Note: all products are considered main products. There are no byproducts) Product Two-by-four Two-by-six Two-by-twelve Units 90,000 FBM 60,000 FBM 40,000 FBM 2. Further processing costs $20,000 $13,200 $13,000 Finished selling price per FBM $0.50 $0.80 $0.90 Required: 1. Prepare a schedule to determine the amount of joint cost allocated to each product if the Net Realizable Value method is used. (9 marks) Should any of the products be sold at the split-off point and not processed further? If so, which one(s)? Show calculations. (6 marks) Hampton Lumber Mills Inc. produces lumber from farmed trees. Raw logs are delivered to the company's plant where they are processed up to the split-off point into three products: two-by-four lumber, two-by-six lumber and two-by-twelve lumber. Lumber is sold by the FBM (foot board measure), which is a common standard in the industry. The joint costs of this process are $60,000, resulting in the following output: Selling price per FBM $0.30 $0.55 $0.70 Product Two-by-four Two-by-six Two-by-twelve Each of these products can be further refined by going through a process that smooths the board by running it through a planer. This additional process causes a decrease in the saleable output for each product by 1%. This process also increases the production cost and the sales value of the output as follows: (Note: all products are considered main products. There are no byproducts) Product Two-by-four Two-by-six Two-by-twelve Units 90,000 FBM 60,000 FBM 40,000 FBM 2. Further processing costs $20,000 $13,200 $13,000 Finished selling price per FBM $0.50 $0.80 $0.90 Required: 1. Prepare a schedule to determine the amount of joint cost allocated to each product if the Net Realizable Value method is used. (9 marks) Should any of the products be sold at the split-off point and not processed further? If so, which one(s)? Show calculations. (6 marks)

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