The Carolina Company prepares lumber for companies who manufacture furniture. The main product is finished lumber with a byproduct of wood shavings. The byproduct is sold to plywood manufactures. For July, the manufacturing process incurred 332,000 in total costs. Eighty thousand board feet of lumber were produced and sold along with 6,800 pounds of shavings. The finished lumber sold for $6.00 per board foot and the shavings sold for $0.60 a pound. There was no beginning or ending inventories.

Prepare an income statement showing the byproduct (1) as a cost reduction during production, and (2) as a revenue item when sold