Troy Company uses 15,000 litres of direct materials input to produce two products, Product X and...
Troy Company uses 15,000 litres of direct materials input to
produce two products, Product X and Product Y. Product X is the
byproduct and Product Y is the main product. Product X sells for $4
per litre and Product Y sells for $50 per litre. The following
information is for August:
| Production | Sales | Beginning Inventory |
Ending Inventory |
|
| Product X: | 4,375 | 4,000 | 0 | 375 |
| Product Y: | 10,000 | 9,625 | 125 | 500 |
The manufacturing costs totalled $15,000.
QUESTION: How much is the ending inventory reduction for
the byproduct if byproducts are recognized in the general ledger at
the point of sale?
| A) |
$1,500 |
|
| B) |
$563 |
|
| C) |
$0 |
|
| D) |
$17,500 |
|
| E) |
$16,000 |
Homework Answers
Correct answer is: C) $0
As byproducts are recognized at the point of sale i.e (4000 X $4 = $16000) then nothing shall be reduced from the ending inventory for the byproduct
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