The Carolina Company Prepares Lumber for Companies Who Manufacture Furniture

Essay

The Carolina Company prepares lumber for companies who manufacture furniture.The main product is finished lumber with a byproduct of wood shavings.The byproduct is sold to plywood manufacturers.For July,the manufacturing process incurred $332,000 in total costs.Eighty thousand board feet of lumber were produced and sold along with 6,800 pounds of shavings.The finished lumber sold for $6.00 per board foot and the shavings sold for $0.60 a pound.There were no beginning or ending inventories.
Required:
Prepare an income statement showing the byproduct (1)as a cost reduction during production,and (2)as a revenue item when sold.