Fundador Inc. manufactures X product from a process that yields a by-product called Z. The by-product requires additional processing cost of P30,000. The by-product will require selling and administrative expenses totaling P20,000. It is Fundador’s accounting policy to charge the joint costs to the main product only. Information concerning a batch produced during the year ended December 31, 2020 follows: Product Units Produced Market Value at Split off Units Sold X 100,000 P50 60,000 Z 8,000 10 8,000 The Joint costs incurred up to split-off point are: Direct materials P2,000,000 Direct labor 800,000 Factory Overhead 200,000 The Selling and Administrative expense of Fundador Inc. for the year ended December 31, 2020 is P1,000,000 exclusive of that for the by-product. 1. What is the gross profit for the year if the net revenue from by-product is treated as other income? a. 1,200,000 b. 1,230,000 c. 1,218,000 d. 1,118,000 2. What is the gross profit for the year if the net revenue from by-product is treated as additional sales revenue?
Fundador Inc. manufactures X product from a process that yields a by-product called Z. The by-product requires additional
Product Units Produced Market Value at Split off Units Sold
X 100,000 P50 60,000
Z 8,000 10 8,000
The Joint costs incurred up to split-off point are:
Direct materials P2,000,000
Direct labor 800,000
Factory Overhead 200,000
The Selling and Administrative expense of Fundador Inc. for the year ended December 31, 2020 is P1,000,000 exclusive of that for the by-product.
1. What is the gross profit for the year if the net revenue from by-product is treated as other income?
a. 1,200,000
b. 1,230,000
c. 1,218,000
d. 1,118,000
2. What is the gross profit for the year if the net revenue from by-product is treated as additional sales revenue?
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