Question: You Carve Me Up manufactures wood statues which yields sawdust

You Carve Me Up manufactures wood statues, which yields sawdust as a by-product. Selling costs associated with the sawdust are $ 250 per ton sold. The company accounts for sawdust sales by deducting the saw-dust’s net realizable value from the major products’ cost of goods sold. Sawdust sales in 2013 were 1,200 tons at $ 335 each. If You Carve Me Up changes its method of accounting for sawdust sales to show the net realizable value as Other Revenue (presented at the bottom of the income statement), how would its gross margin be affected?

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  • CreatedJune 03, 2014
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