Blue Paper Company Processes Wood Pulp into Two Products

Essay

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:

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.
Required:
Prepare a product line income statement in gross margin format. Joint costs are allocated using the net realizable value method assuming all available product is sold.