Bismite Corporation purchases trees from Cheney lumber and processes them up to the split-off point where two products (paper and pencil casings) are obtained. The products are then sold to an independent company that markets and distributes them to retail outlets. The following information was collected for the month of October:

The cost of purchasing 310 trees and processing them up to the split-off point to yield 180,000 sheets of paper and 180,000 pencil casings is $12,500.
Bismite's accounting department reported no beginning inventory.
What is the total sales value at the split-off point for paper?
A) $42,600
B) $34,000
C) $36,000
D) $43,200

Question

Bismite Corporation purchases trees from Cheney lumber and processes them up to the split-off point where two products (paper and pencil casings) are obtained. The products are then sold to an independent company that markets and distributes them to retail outlets. The following information was collected for the month of October:

The cost of purchasing 310 trees and processing them up to the split-off point to yield 180,000 sheets of paper and 180,000 pencil casings is $12,500.
Bismite's accounting department reported no beginning inventory.
What is the total sales value at the split-off point for paper?
A) $42,600 
B) $34,000 
C) $36,000 
D) $43,200

Quizplus · Accepted Answer

Sales value of paper = 180,000 sheets × $0.20 = $36,000

Bismite Corporation Purchases Trees from Cheney Lumber and Processes Them