Northwest Building Projects manufactures two lumber productsfrom a joint milling process: residential building lumber andcommerical building lumber. A standard production run incurs jointcosts of $350,000 and results in 120,000 units of residentialbuilding lumber and 120,000 units of commercial building lumber.Each residential building lumber sells for $12 per unit and eachcommerical building lumber sells for $8 per unit.
1) Assume that the CBL is not marketable at split-off but mustbe planed and sized at a cost of $220,000 per production run.During this process, 10,000 units are unavoidably lost and have novalue. The remaining units of CBL are salable at $10 per unit. TheRBL, although salable immediately at the split-off point, is coatedwith a tarlike preservative that costs $250,000 per production run.The RBL is then sold for $13 each. Using the net realizable valuebasis, how much of the completion costs should be assigned to eachunit of CBL?
