Use the following to answer questions:
Glenwilliams Lumber Company manufactures 3 products: Poplar, Birch, and Pine from a joint process. Joint-process costs in 2007 were $3,000,000. Additional information regarding the three products is as follows:

-Assuming that joint-product costs are allocated using the physical-measures method, what were the total costs of Pine?
A) $7,500,000
B) $1,500,000
C) $3,000,000
D) $6,000,000

Question

Use the following to answer questions:
Glenwilliams Lumber Company manufactures 3 products: Poplar, Birch, and Pine from a joint process. Joint-process costs in 2007 were $3,000,000. Additional information regarding the three products is as follows:
 
-Assuming that joint-product costs are allocated using the physical-measures method, what were the total costs of Pine?
A) $7,500,000 
B) $1,500,000 
C) $3,000,000 
D) $6,000,000

Quizplus · Accepted Answer

Pine's total costs are $7,500,000 because the physical-measures method allocates costs based on the physical output of each product. Pine has a physical output of 1,500,000 units, which is 50% of the total physical output of 3,000,000 units. Therefore, Pine's total costs are 50% of the total joint-product costs, which is $7,500,000.

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