Sawmill, Inc. processes wood pulp into three grades of plywood: Hardwood , Softwood , and Decorative .
Question:
Sawmill, Inc. processes wood pulp into three grades of plywood: Hardwood, Softwood, and Decorative. Each grade of plywood may be sold as is at the split-off point or processed further to a higher grade of product, with the price and cost information shown below. The joint processing cost to get the wood pulp to split-off is $16,000. Sawmill, Inc. desires to maximize its profit by making an optimal “sell-or-process-further” decision for each grade of plywood, and also allocate its joint costs according to such decisions.
Selling price Cost after Selling price
Board-feet per board-feet split-off per board-feet
Product produced at split-off (per board-feet) after split-off
Hardwood 2,500 $5.5 $2.0 $8.0
Softwood 3,000 3.0 1.5 5.0
Decorative 4,500 7.0 3.5 10.0
What would be the Gross Margin as a % of Sales Revenue computed for each joint product if the company used the Constant Gross Margin % method (Round numbers to 4 decimal places if needed & choose the closest value to your answer!)?
Group of answer choices
61.65%
48.44%
68.44%
75.94%
Expert Answer:
Answer Summarigad Sauomill inc pocesses coood pulp into O option6 The total cost of the pooduc... View the full answer
