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Unformatted text preview: Q4: Suppose a lumber company spends $500 for a mahogany log and an additional $30 to saw it into two grades of lumber. The process results in 700 feet of Grade A lumber and 700 feet of Grade B lumber. Grade A lumber sells for $3 per foot board and Grade B lumber sells for $1 per foot board. Use the Relative Sales Value method to calculate the amount of joint cost to be allocated to each type of lumber. (Section 7.3) A4: Joint cost allocated to Grade A : $530 x ($2100 / $2800) = $397.50 Joint Cost allocated to Grade B : $530 x ($700 / $2800) = $132.50 Q5: True or False. Fixed costs are never incremental. (Section 7.1) A5: False....
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- Summer '08
- Managerial Accounting