Red Paper Company processes wood pulp into two products. During March 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 March but ending inventories totalled 10,000 kilograms for paper and 12,000 kilograms for cardboard.
Required:
Prepare a product line income statement assuming that joint costs are allocated on the constant gross margin percentage method based on total production. Present production costs and separable costs individually.

Question

Red Paper Company processes wood pulp into two products. During March 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 March but ending inventories totalled 10,000 kilograms for paper and 12,000 kilograms for cardboard.
Required:
Prepare a product line income statement assuming that joint costs are allocated on the constant gross margin percentage method based on total production. Present production costs and separable costs individually.

Quizplus · Accepted Answer

The Answer of Red Paper Company processes wood pulp into two products. During March 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 March but ending inventories totalled 10,000 kilograms for paper and 12,000 kilograms for cardboard.
Required:
Prepare a product line income statement assuming that joint costs are allocated on the constant gross margin percentage method based on total production. Present production costs and separable costs individually.

Red Paper Company Processes Wood Pulp into Two Products