Wisconsin Milk and Ice Cream Manufacturing operates a singleplant in Sun Prairie, Wisconsin. It manufactures milk and ice creamfor 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 Juneusing the NRV Method

Follow the instructions on the Data tab of the worksheet. Showall calculations within the cells of the Excel spreadsheet. Thismeans that you must use formulas and links so that your thoughtprocess can be examined. You must also include a detailedexplanation of each journal entry that you make or do not make oneach date to convey your thought process. There should be no hardcoding of solutions.

	Joint costs Joint costs of processing rawmilk			Cream	Liquid Skim
Joint costs	$                     1,000,000
[from 300,000 gallons ofmilk]
Separable costs buttercream				$                              600,000
Separable costs milk					$                        500,000
Raw Milk is processed furtherto make Cream and Liquid Skim				Cream is processed further to makeButtercream	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 RealizableValue (NRV) Method
2). Compute the Product LineIncome statement for month ended June using the NRV Method

Allocation ofjoint 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 atsplitoff point							3,000,000	5,750,000
Weighting
Joint costs Allocation
Production Costs perGallon
Number Produced
Production Costs perGallon

Product lineincome 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 %