Blue Paper Company processes wood pulp into two products. During January the joint costs of processing were $144,000. Production and sales value information for the month were as follows:

Paper sells for $2.75 a kilogram and cardboard sells for $3.50 a kilogram.
There were no beginning inventories for January but ending inventories totalled 10,000 kilograms for paper and 12,000 kilograms for cardboard.
Required:
Prepare a product line income statement in gross margin format. Joint costs are allocated using the net realizable value method assuming all available product is sold.

Question

Blue Paper Company processes wood pulp into two products. During January the joint costs of processing were $144,000. Production and sales value information for the month were as follows:
   
Paper sells for $2.75 a kilogram and cardboard sells for $3.50 a kilogram.
There were no beginning inventories for January but ending inventories totalled 10,000 kilograms for paper and 12,000 kilograms for cardboard.
Required:
Prepare a product line income statement in gross margin format. Joint costs are allocated using the net realizable value method assuming all available product is sold.

Quizplus · Accepted Answer

The Answer of Blue Paper Company processes wood pulp into two products. During January the joint costs of processing were $144,000. Production and sales value information for the month were as follows:
   
Paper sells for $2.75 a kilogram and cardboard sells for $3.50 a kilogram.
There were no beginning inventories for January but ending inventories totalled 10,000 kilograms for paper and 12,000 kilograms for cardboard.
Required:
Prepare a product line income statement in gross margin format. Joint costs are allocated using the net realizable value method assuming all available product is sold.

Blue Paper Company Processes Wood Pulp into Two Products