Problem:
A company makes 3 types of paper, a,b,c
The process begins with taking 1000 pounds of scrap lumber which they pay $0.75 a pound for. The joint process also costs an addition $400 to process. The lumber is processed and the three types of paper come out. 200 pounds of a, 30 pounds of b, and 100 pounds of c. a can be sold at a splitoff for $2 a pound, b $3 pound, c $4 pound. each type is futher processed. a is processed for an additional cost of $200, b $100, c $500. After the addtional processing type a paper can be sold for $3 pound, b $6 pound, c $8 pound.
1. Calculate the value of inventory if the joint costs are allocated by weight.
2. Calculate the value of inventory if the joint costs are allocated by sales value at split off.
3. Calculate the value of inventory if the joint costs are allocated by net relizable value.
Comment on the additional processing.