Trady's Tree People manufactures wood statues, which yields sawdust as a by-product. Selling costs associated with the
Question:
Trady's Tree People manufactures wood statues, which yields sawdust as a by-product. Selling costs associated with the sawdust are $25 per ton sold. The company accounts for sawdust sales by deducting the sawdust's net realizable value from the major products' cost of goods sold. Sawdust sales in 2010 were 1,200 tons at $235 each. If Trady's Tree People changes its method of accounting for sawdust sales to show the net realizable value as Other Revenue (presented at the bottom of the income statement), how would its gross margin be affected?
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