Prescott Lumber processes logs into grade A and grade B lumber. Logs cost $19,600 per load. The milling process produces 4,000 units of grade A with a market value of $50,400, and 12,000 units of grade B with a market value of $7,200. The cost of the milling process is $4,000 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? 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? 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)? c-2. Is it really possible to determine which product is more profitable?

Lynch company manufactures and sells a single product. the following costs were incurred during the company’s first year of operations: variable costs per unit: manufacturing: direct materials $ 12 direct labor $ 6 variable manufacturing overhead $ 1 variable selling and administrative $ 1 fixed costs per year: fixed manufacturing overhead $ 308,000 fixed selling and administrative $ 218,000 during the year, the company produced 28,000 units and sold 15,000 units. the selling price of the company’s product is $56 per unit. required: 1. assume that the company uses absorption costing: a. compute the unit product cost. b. prepare an income statement for the year. 2. assume that the company uses variable costing: a. compute the unit product cost. b. prepare an income statement for the year.

Gerda, a real estate agent, is selling a moderately priced house in a subdivision. she knows from her uncle that the factory being built half a mile from the subdivision will be manufacturing dog food, using a process that creates a very strong odor that permeates the surrounding neighborhood. a buyer, who is unaware of the type of factory under construction, makes an offer on one of the houses gerda is selling, and within a short time, the deal goes through. what does this scenario best illustrate?

The following are budgeted data: january february march sales in units 16,200 22,400 19,200 production in units 19,200 20,200 18,700 one pound of material is required for each finished unit. the inventory of materials at the end of each month should equal 20% of the following month's production needs. purchases of raw materials for february would be budgeted to be: