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How would its gross margin be affected

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Question - Carvers Inc. 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 sawdust's net realizable value from the major products' cost of goods sold. Sawdust sales for the year were 1,200 tons at $335 each. If the company 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?

Reference no: EM133088181

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