Wisconsin Milk and Ice Cream Manufacturing operates a single plant in Sun Prairie, Wisconsin. It manufactures milk and ice cream for retail and private label marketers in the Midwest.

Requirements:

Compute the Net Realizable Value (NRV) method.

Complete the Product Line Income statement for month ended June using the NRV Method

Follow the instructions on the Data tab of the worksheet. Show all calculations within the cells of the Excel spreadsheet. This means that you must use formulas and links so that your thought process can be examined. You must also include a detailed explanation of each journal entry that you make or do not make on each date to convey your thought process. There should be no hard coding of solutions.

	Joint costs Joint costs of processing raw milk			Cream	Liquid Skim
Joint costs	$ 1,000,000
[from 300,000 gallons of milk]
Separable costs buttercream				$ 600,000
Separable costs milk					$ 500,000
Raw Milk is processed further to make Cream and Liquid Skim				Cream is processed further to make Buttercream	Liquid Skim is processed further to make Milk
	Cream	Liquid Skim		Buttercream	Milk
Beg Inventory (Gallons)	0	0		0	0
Production	100,000	150,000		90,000	125,000
Transfer	100,000	150,000
Sales in June				80,000	115,000
End inventory (Gallons)				10,000	10,000
Selling price per gallon	25	18		40	50
Required:
1). Compute the Net Realizable Value (NRV) Method
2). Compute the Product Line Income statement for month ended June using the NRV Method

Allocation of joint costs using net realizable value method							Buttercream	Milk	Total
Final sales value							$ 3,600,000	$ 6,250,000	$ 9,850,000
Deduct separable costs							600,000	500,000	$ 1,100,000
Net realizable Value at splitoff point							3,000,000	5,750,000
Weighting
Joint costs Allocation
Production Costs per Gallon
Number Produced
Production Costs per Gallon

Product line income statement using net realizable method
							Buttercream	Milk	total
Revenues
costs of goods sold
	joint costs
	separable costs
	production costs
	ending inventory
cost of goods sold
Gross margin
Gross margin %