Physical Unks Method, Relative Sales-value-at-Spit of Method, Net Realizable Value Method, Decision Making Sorimed Saw-ll, Inc. (SSC), purchases logs from Independent timber contractors and processes them into the following three types of lumber products: 1. Stud. Por residential contraction (eg. wals and ceiling! 2. Decorative pieces c... fireplace mantcs and beams for cathedral ceilings 3. Posts used as support breccs (eg, mine support braces and braces for exterior fenes around anch properties) These products are the result of a joint sawmil process that inves removing baric from the logs, cutting the logs into a wo kable size ranging from 8 to 16 feet in length, and then cutting the ind Moual products from the logs, ocpending upon the type of wood (pinc. ock. walnut, or maple and the size (diameters of the lop. The joint process results in the following costs and output of products during a typical month: Jont production $500,000 Materia's rough timberlocs Debaridra (labor and owerhead) 50.000 Szing labor and overse) 200.000 Product outing (abor and we tread) 260,000 Total joint costs $1,010,000 Praxcurt yield and Hvalprits from the paint presa : Monthly Fully Processed Product Output Sales Price Durat we ci 5.000 102 Posis 15,000 20 The studs are sold ough-cutuber after emerging from the sawmill operation without further processing by 551. No, the poets require no further processing. The decorative pieces must be planed and further szed after energing from the SSI sawmil. This add tonal process ng cos SSE $100,000 per month and normally results In a los o lo percent of the unts entering the process without this planing and string process, there is stils active Intermediate market for the urinsted cecorathe pleces where the sales prie averages S60 per unit Required: 1. Breed on the information given for Sonima Samil, Inc., allocate the joint proces ng costs of $1,000,000 to each of the three product Ines using the: 3. Relative selts-velus-st-sok-on method. When reculred, round dec mal values to four places before converting to a percentage. For example, 38349 Nould be rounded to B335 and entered as "33 35" percent Monthly Unit Output Allocated Joint Relative Sales Value at Split-on Sales Price Der Unit Percent of Sales Costs Shirts RO, DOO 640,000 51.61 521.290 24.10 : 5,000 60 ile 244,319 300,000 300,000 15,000 20 24.19 244,319 Total $1.240,00 1,240,000 100 1,010,000 (Hete. Difference due to roding) b. Phys cal units method at spital. Allocated Joint Costs Units Percent Joint Cost Studs 80,000 80 % $ 1,010,000 $ 808,000 Decorative pieces 5,000 5 % 1,010,000 50,500 Posts 15,000 15 % 1,010,000 151,500 Total 100,000 $ 1,010,000 c. Estimated net realizable value method. When required, round decimal values to four places before converting to a percentage. For example, .88349 would be rounded to .8835 and entered as "88.35 percent. Fully Processed Monthly Unit Output Sales Price per Unit Net Realizable Value Percent of Value Estimated Allocated Joint Costs $ Studs 80,000 50.39 % 8 640,000 508,976 Decorative pieces 4,500 100 330,000 25.98 % 262,441 Posts 15,000 20 300,000 23.62 % 238,583 Total 100 % 1,270,000 1,010,000 (Note: Difference due to rounding.) 2. Prepare an analysis for Sonimad Sawmill, Inc., to compare processing the decorative pieces further as it presently does, with selling the rough-cut product immediately at split-off. Sonimad Sawmill, Inc. Analysis Report 5,000 Monthly unit output Less: Normal further processing shrinkage 500 Units available for sale 4,500 Final sales value 450,000 300,000 Less: Sales value at split-off $ 150,000 Differential revenue Less: Further processing costs 120,000 X Additional contribution from further processing 30,000 X