Determine the cost of food wrapping and book covers

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Reference no: EM13920102 , Length: 3

Pyramid Printing Company is a printer of magazines and retail inserts. In addition, there are two joint products (food wrapping and book covers) and one byproduct (shipping-box inserts) that originate from the trimmings of Pyramid's paper rolls in production. The food wrapping and book covers are the same size. The shipping-box inserts are sold to online retailers for shipping books. All joint products and byproducts are sold as sustainable alternatives to other recycling opportunities.

Pyramid's cost information by process follows:

Pyramid Printing Company Products

Pounds of production

Cost

 Magazines

400,000

$1,400,000

 Retail inserts

360,000

1,000,000

 Food wrapping

100,000

1,200,000

 Book covers

240,000

1,600,000

 Shipping-box inserts (byproduct)

20,000

40,000

The shipping-box inserts are able to be sold for $800,000 to online retailers.

Requirements:

1. Determine the cost of food wrapping and book covers if the sales method is used for shipping-box inserts.

2. Determine the cost of food wrapping and book covers if the production method is used for shipping box inserts.

3. Which method would you suggest is the best for Pyramid?

Your paper should meet the following requirements:

2-3 pages in length including calculations.

Reference no: EM13920102

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