Bismite Corporation purchases trees from Cheney lumber 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:250 trees

Production:paper500,000 sheets

pencil casings250,000

Sales:paper400,000 at $0.10 per page

pencil casings250,000 at $0.20 per casing

The cost of purchasing 250 trees and processing them up to the splitoff point to yield 500,000 sheets of paper and 250,000 pencil casings is $20,000. Bismite's accounting department reported no beginning inventory.

a) What is the total sales value at the splitoff point for paper?

b) What is the total sales value at the splitoff point of the pencil casings?

d) If the sales value at splitoff method is used, what is the approximate production cost for each pencil casing?

e) If the sales value at splitoff method is used, what is the approximate production cost for each paper sheet?

f) If the sales value at splitoff method is used, what are the approximate joint costs assigned to ending inventory for paper?

Answer rating: 100% (QA)

To answer the questions we need to calculate the total sales value at the splitoff point for paper and pencil casings as well as the approximate produ... View the full answer