Prescott Lumber processes logs into grade A and grade B lumber. Logs cost $18,800 per load. The milling process produces 5,000 units of grade A with a market value of $78,400, and 15,000 units of grade B with a market value of $11,200. The cost of the milling process is $14,000 per load.

Required:

a. If the costs of the logs and the milling process are allocated on the basis of units of output, what cost will be assigned to each product?

	cost allocation
grade A	?
grade B	?

b. If the costs of the logs and the milling process are allocated on the basis of the net realizable value, what cost will be assigned to each product?

	cost allocation
grade A	?
grade B	?

c-1. How much profit or loss does the grade B lumber provide using the data in this problem and your analysis in requirement (a)?

loss

?