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
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:
Sales Value at
Product Kilograms produced splitoff point Separable coasts
Paper
130,000 80,000 224,000
Cardboard
108,000 70,000 264,000
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.
-make product line income statement in gross margin format. Joint costs are allocated using the net realizable value method assuming all available product is sold.
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