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# The Carolina Company prepares lumber for companies

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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.

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The solution provides detailed calculations and explanations for the problem.

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Sale revenue of:
? Lumber = \$6 x 80,000 = \$480,000
? Savings = \$.6*6,800 = \$4,080

Thus ...

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