Given: Joint costs for log production are $600,000 Production Sales Inventory Lumber (board feet) 300,000 270,000...

Given: Joint costs for log production are $600,000

Production Sales Inventory

Lumber (board feet) 300,000 270,000 30,000

Scraps (per log) 1000 pcs 900 pcs 100 pcs

Lumber can be sold for $3 per board foot. The scraps can be sold for $10 per piece.

Required: Create Income Statements using the by-product value recognized at the time of: A. Sale Method B. Production Method

Expert Solution


	Lumber (board feet)	Scraps (per log)
Production	300,000	1,000
Sales	270,000	900
Ending Inventory	30,000	100


	Income statements	Production method	Sale method
	Lumber (3* 300,000)	$900,000	$900,000
	Scraps (10 *900)		$9,000
	Revenue	$900,000	$909,000
	Production costs	$600,000	$600,000
	Scraps NRV(1000*10)	-$10,000
	Net cost	$590,000	$600,000
	Unit cost	$1.97	$2.00
	Ending inventory	-$59,000	-$60,000
	COGS	$531,000	$540,000
	Gross margin	$369,000	$369,000

ekkarill92 answered 3 years ago

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