Ontario Lumber 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 $166,000 in total costs.Eighty thousand board metres of lumber were produced and sold along with 6,800 kilograms of shavings.The finished lumber sold for $3.00 per board metre and the shavings sold for $0.30 a kilogram.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 Answer of Ontario Lumber 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 $166,000 in total costs.Eighty thousand board metres of lumber were produced and sold along with 6,800 kilograms of shavings.The finished lumber sold for $3.00 per board metre and the shavings sold for $0.30 a kilogram.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.

Ontario Lumber Company Prepares Lumber for Companies Who Manufacture Furniture