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Question - Raynor Manufacturing purchases trees from Tree Nursery 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.
Production:
paper: 30,000 sheets
pencil casings: 30,000
Sales:
paper: 29,000 at $0.04 per page
pencil casings: 30,000 at $0.10 per casing
The cost of purchasing 50 trees and processing them up to the split-off point to yield 30,000 sheets of paper and? 30,000 pencil casings is $1,500.
Raynor Manufacturing's accounting department reported no beginning inventories; however, ending inventory amounts reflected 1,000 sheets of paper in stock.
What are the pencil casings' sales value at the split-off point?
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