Red Paper Company Processes Wood Pulp into Two Products

Question 146

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: img 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.