Gee Company produces a product known as G-on. In the manufacture of this chemical, a byproduct results which can be sold as is for P25 per kilogram or be processed further and sold for P60 per kilogram. The additional processing for each kilogram of byproduct requires P10 for materials, P12 for labor and P11 for factory overhead. Production costs of the main product to the point of separation were: materials, P11,100,000; labor, P9,050,000; and factory overhead, P7,570,000. During the month, 170,000 kilograms of G-on and 26,000 kilograms of byproduct were produced. REQUIRED: Prepare journal entries for the byproduct when it is: Stored without assigning it any cost and later sold on account at P25 per kilogram, with no additional costs incurred Stored and with cost at P25 per kilogram, reducing the main product cost by the amount allocated to the byproduct Further processed and stored, with no cost prior to separation allocated to it Further processed and stored, the cost prior to separation being allocated to it using the market values at the point of separation for cost allocation, with the cost of the main product being reduced by the cost
Gee Company produces a product known as G-on. In the manufacture of this chemical, a byproduct results which can be sold as is for P25 per kilogram or be processed further and sold for P60 per kilogram. The additional processing for each kilogram of byproduct requires P10 for materials, P12 for labor and P11 for factory overhead. Production costs of the main product to the point of separation were: materials, P11,100,000; labor, P9,050,000; and factory overhead, P7,570,000. During the month, 170,000 kilograms of G-on and 26,000 kilograms of byproduct were produced. REQUIRED: Prepare journal entries for the byproduct when it is: Stored without assigning it any cost and later sold on account at P25 per kilogram, with no additional costs incurred Stored and with cost at P25 per kilogram, reducing the main product cost by the amount allocated to the byproduct Further processed and stored, with no cost prior to separation allocated to it Further processed and stored, the cost prior to separation being allocated to it using the market values at the point of separation for cost allocation, with the cost of the main product being reduced by the cost
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Exercise 8-6. BYPRODUCT COSTING AND ENTRIES
Gee Company produces a product known as G-on. In the manufacture of this chemical, a
byproduct results which can be sold as is for P25 per kilogram or be processed further and sold for P60
per kilogram. The additional processing for each kilogram of byproduct requires P10 for materials, P12
for labor and P11 for factory
separation were: materials, P11,100,000; labor, P9,050,000; and factory overhead, P7,570,000. During
the month, 170,000 kilograms of G-on and 26,000 kilograms of byproduct were produced.
REQUIRED: Prepare
- Stored without assigning it any cost and later sold on account at P25 per kilogram, with no additional costs incurred
- Stored and with cost at P25 per kilogram, reducing the main product cost by the amount allocated to the byproduct
- Further processed and stored, with no cost prior to separation allocated to it
- Further processed and stored, the cost prior to separation being allocated to it using the market values at the point of separation for cost allocation, with the cost of the main product being reduced by the cost
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