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Case II. Merhardies, Inc. is a manufacturer of different types of lumber products. Their market involves independent timber contractors in the heart of Bonifacio Global City, Taguig. Their lumber products are the following: Studs for residential buildings (for interior designs); Decorative pieces (fireplace mantels, beams for cathedral ceilings); and Posts used as support braces (mine support braces, braces for exterior fences on ranch properties). The aforementioned products are actually the result of a joint sawmill process that involves removal of bark from the logs, cutting the logs into workable size which ranges from 8 to 16 feet in length, and then cutting the individual products from logs. During 1st quarter of the year, the following joint costs are incurred: Rough timber logs (DM) Debarking cost (DL & MOH) Sizing cost (DL & MOH) Cutting cost (DL & MOH) Total joint costs P 1,000,000.00 100,000.00 400,000.00 500,000.00 P 2,000,000.00 Below are the product yields and average sales values on a per-unit basis from the joint process: Products Studs Decorative pieces Posts Quarterly output of materials at SOP Fully Processed Selling Price 225,000 units P 8.00 15,000 units 60,000 units 100.00 20.00 Further information revealed that the studs are sold as rough-cut lumber after emerging from the sawmill operation without further processing. Also the posts require no further processing beyond split-off point. However, the decorative pieces must be planned and further sized after emerging from sawmill. This entails additional costs of P300,000 per quarter and normally, this process would result to 10% loss in units. Without this planning and sizing process, there is still an active market for the unfinished decorative pieces and that these can be sold at P60 per unit. Requirements: 1. Allocate the joint cost using SV@SOP method, physical measure and NRV method. 2. Decide whether the decorative pieces should be processed further.

Case II. Merhardies, Inc. is a manufacturer of different types of lumber products. Their market involves independent timber contractors in the heart of Bonifacio Global City, Taguig. Their lumber products are the following: Studs for residential buildings (for interior designs); Decorative pieces (fireplace mantels, beams for cathedral ceilings); and Posts used as support braces (mine support braces, braces for exterior fences on ranch properties). The aforementioned products are actually the result of a joint sawmill process that involves removal of bark from the logs, cutting the logs into workable size which ranges from 8 to 16 feet in length, and then cutting the individual products from logs. During 1st quarter of the year, the following joint costs are incurred: Rough timber logs (DM) Debarking cost (DL & MOH) Sizing cost (DL & MOH) Cutting cost (DL & MOH) Total joint costs P 1,000,000.00 100,000.00 400,000.00 500,000.00 P 2,000,000.00 Below are the product yields and average sales values on a per-unit basis from the joint process: Products Studs Decorative pieces Posts Quarterly output of materials at SOP Fully Processed Selling Price 225,000 units P 8.00 15,000 units 60,000 units 100.00 20.00 Further information revealed that the studs are sold as rough-cut lumber after emerging from the sawmill operation without further processing. Also the posts require no further processing beyond split-off point. However, the decorative pieces must be planned and further sized after emerging from sawmill. This entails additional costs of P300,000 per quarter and normally, this process would result to 10% loss in units. Without this planning and sizing process, there is still an active market for the unfinished decorative pieces and that these can be sold at P60 per unit. Requirements: 1. Allocate the joint cost using SV@SOP method, physical measure and NRV method. 2. Decide whether the decorative pieces should be processed further.

Managerial Accounting
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter1: Introduction To Managerial Accounting
Section: Chapter Questions
Problem 2E: Indicate whether the following costs of Procter Gamble (PG), a maker of consumer products, would be...
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Case II. Merhardies, Inc. is a manufacturer of different types of lumber products. Their market involves independent timber contractors in the heart of Bonifacio Global City, Taguig. Their lumber products are the following: Studs for residential buildings (for interior designs); Decorative pieces (fireplace mantels, beams for cathedral ceilings); and Posts used as support braces (mine support braces, braces for exterior fences on ranch properties). The aforementioned products are actually the result of a joint sawmill process that involves removal of bark from the logs, cutting the logs into workable size which ranges from 8 to 16 feet in length, and then cutting the individual products from logs. During 1st quarter of the year, the following joint costs are incurred: Rough timber logs (DM) Debarking cost (DL & MOH) Sizing cost (DL & MOH) Cutting cost (DL & MOH) Total joint costs P 1,000,000.00 100,000.00 400,000.00 500,000.00 P 2,000,000.00 Below are the product yields and average sales values on a per-unit basis from the joint process: Products Studs Decorative pieces Posts Quarterly output of materials at SOP Fully Processed Selling Price 225,000 units P 8.00 15,000 units 60,000 units 100.00 20.00 Further information revealed that the studs are sold as rough-cut lumber after emerging from the sawmill operation without further processing. Also the posts require no further processing beyond split-off point. However, the decorative pieces must be planned and further sized after emerging from sawmill. This entails additional costs of P300,000 per quarter and normally, this process would result to 10% loss in units. Without this planning and sizing process, there is still an active market for the unfinished decorative pieces and that these can be sold at P60 per unit. Requirements: 1. Allocate the joint cost using SV@SOP method, physical measure and NRV method. 2. Decide whether the decorative pieces should be processed further.
Transcribed Image Text:Case II. Merhardies, Inc. is a manufacturer of different types of lumber products. Their market involves independent timber contractors in the heart of Bonifacio Global City, Taguig. Their lumber products are the following: Studs for residential buildings (for interior designs); Decorative pieces (fireplace mantels, beams for cathedral ceilings); and Posts used as support braces (mine support braces, braces for exterior fences on ranch properties). The aforementioned products are actually the result of a joint sawmill process that involves removal of bark from the logs, cutting the logs into workable size which ranges from 8 to 16 feet in length, and then cutting the individual products from logs. During 1st quarter of the year, the following joint costs are incurred: Rough timber logs (DM) Debarking cost (DL & MOH) Sizing cost (DL & MOH) Cutting cost (DL & MOH) Total joint costs P 1,000,000.00 100,000.00 400,000.00 500,000.00 P 2,000,000.00 Below are the product yields and average sales values on a per-unit basis from the joint process: Products Studs Decorative pieces Posts Quarterly output of materials at SOP Fully Processed Selling Price 225,000 units P 8.00 15,000 units 60,000 units 100.00 20.00 Further information revealed that the studs are sold as rough-cut lumber after emerging from the sawmill operation without further processing. Also the posts require no further processing beyond split-off point. However, the decorative pieces must be planned and further sized after emerging from sawmill. This entails additional costs of P300,000 per quarter and normally, this process would result to 10% loss in units. Without this planning and sizing process, there is still an active market for the unfinished decorative pieces and that these can be sold at P60 per unit. Requirements: 1. Allocate the joint cost using SV@SOP method, physical measure and NRV method. 2. Decide whether the decorative pieces should be processed further.
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