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Snake River Sawmill manufactures two lumber products from a joint milling process. The two products developed are mine support braces (MSB) and unseasoned commercial building lumber (CBL). A standard production run incurs joint costs of $380,000 and results in 68,000 units of MSB and 98,000 units of CBL. Each MSB sells for $2, and each unit of CBL sells for $10. Calculate the amount of joint cost allocated to commercial building lumber (CBL) on a physical-units basis. (Round the calculation of "Relative Proportion" to the nearest whole percent. Round your final answers to the nearest dollar amount.)

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Answer:

The amount of joint cost allocated to commercial building lumber (CBL) on a physical-units basis is $224,337.

Explanation:

In the joint cost allocation using physical-units basis, costs will be allocated proportionately on the amount of physical unit produced.

There are 2 products in the join-production process, CBL are produced at 98,000 units, MSB are produced at 68,000 units. Thus, we have the below calculation:

- Total units produced = 98,000 + 68,000 = 166,000 units

- Cost allocated to CBL = 98,000/166,000 = 59.036%; Cost allocated to MSB = 68,000/166,000 = 40.964%

=> Joint-cost allocated to CBL is: 380,000 x 59.036% = $224,337.

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