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Trans-Pacific Lumber runs a mill in the Northwest that produces two grades of lumber, A...

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Accounting

Trans-Pacific Lumber runs a mill in the Northwest that produces two grades of lumber, A and B, and a by-product, sawdust. The company chooses to allocate the costs on the basis of the physical quantities method.

Last month, it processed 130,000 logs at a total cost of $355,000. The output of the process consisted of 34,500 units of grade A, 51,500 units of grade B, and 15,500 units of sawdust. The sawdust can be sold for $19,600. This is considered to be its net realizable value, which is deducted from the processing costs of the main products.

Required:

What share of the joint costs should be assigned to grade A and grade B?

Product Joint Cost

Grade A $

Grade B $

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