A Lumber Mill Bought a Shipment of Logs for $40,000

Multiple Choice

A lumber mill bought a shipment of logs for $40,000. When cut, the logs produced a million board feet of lumber in the following grades. Compute the cost to be allocated to Type 1 and Type 2 lumber, respectively, if the value basis is used. Type 1-400,000 bd. ft. priced to sell at $0.12 per bd. ft. Type 2- 400,000 bd. ft. priced to sell at $0.06 per bd. ft. Type 3- 200,000 bd. ft. priced to sell at $0.04 per bd. ft.

A) $40,000; $24,000.
B) $24,000; $8,000.
C) $13,333; $4,444.
D) $24,000; $12,000.
E) $16,000; $16,000.