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.