The Bishop's Falls Lumber Corporation harvests lumber and prepares it for sale to wholesalers of lumber and

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The Bishop's Falls Lumber Corporation harvests lumber and prepares it for sale to wholesalers of lumber and wood products. The main product is finished lumber, which is sold to wholesale construction suppliers. A byproduct of the processes is wood pellets, which are sold to wholesalers of wood pellet stoves. During December 2010, the manufacturing process incurred $664,000 in total costs; 160,000 board feet of lumber were produced and sold along with 40,000 pounds of pellets. The finished lumber sold for $10 per board foot and the pellets sold for $4 per 100-pound bag. There were no beginning or ending inventories.

a. Compute the December 2010 gross margin for Bishop's Falls Lumber Corporation assuming that by-product revenues reduce joint production costs.

b. How would your answer change if by-products are accounted for as revenue when sold?

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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Cost Accounting Foundations And Evolutions

ISBN: 9781618533531

10th Edition

Authors: Amie Dragoo, Michael Kinney, Cecily Raiborn

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