A Sawmill Processes Logs into Four Grades of Lumber Totalling

Multiple Choice

A sawmill processes logs into four grades of lumber totalling 500,000 board metres as follows at a joint cost of $300,000: $\begin{array}{lcc}\text { Grade } & \text { Board Metres } & \text { Final Sales Value }\\\text { First and second } & 75,000 & \$ 56,250 \\\text { No. } 1 \quad\text { common } & 200,000 & 180,000 \\\text { No. } 2 \quad\text { common } & 100,000 & 105,000 \\\text { No. } 3 \quad\text { common } & 125,000 & 127.500\end{array}$


- What is the gross profit of No.3 common if the constant gross margin percentage method is used?

A) $45,900
B) $81,600
C) $135,000
D) $168,750