Sherlock company _ Allocation of Joint Costs

| October 3, 2018

Problem V
Sherlock company processes
timber into four products. During January, the joint costs of processing were $280,000. There was no inventory at the
beginning of the month. Production and sales value information for the month is
as follows (bdft = board foot):

Sales Value at

Product

Board feet

Splitoff Point

Ending Inventory

2 x 4’s

6,000,000

$0.30 per board foot

500,000 bdft.

2 x 6’s

3,000,000

0.40 per board foot

250,000 bdft.

4 x 4’s

2,000,000

0.45 per board foot

100,000 bdft.

Slabs

1,000,000

0.10 per board foot

50,000 bdft.

Required:
Determine the value
of ending inventory if the sales value at splitoff method is used for product
costing. Record your answers in the Tables below. You do not have to
show your work (calculations). Fill-in all of the cells below but not the
cells noted with “xxxxxxx.” Round to 3 decimal places when necessary and you
can omit $ signs.
Answer:

Product

Board feet

Sales Value

Percent

Joint Cost

Allocated

2 x 4’s

6,000,000

2 x 6’s

3,000,000

4 x 4’s

2,000,000

Slabs

1,000,000

Xxxxxxx

Xxxxxxxx

xxxxxxxxxx

xxxxxxx

xxxxxxxxxx

xxxxxxxxxxx

Totals

Xxxxxxxxx

100%

xxxxxxxxxxx

Product

Fraction of Production in Inventory

Allocated

Inventory value

2 x 4’s

500,000/6,000,000 ×

2 x 6’s

250,000/3,000,000 ×

4 x 4’s

100,000/2,000,000 ×

Slabs

50,000/1,000,000 ×

Xxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxx

xxxxxxxxxxx

Total

xxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxx

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