Problem 14: Accounting of By-Product Midnight Oil Corporation manufactures Max product from a process that yielas a by-product called YAN. The by-product requires additional processing cost oI P30,000. The by-product will require selling and administrative expenses totaling P20,000. It is Midnight Oil's accounting policy to charge the joint costs to the main product only. Information concerning a batch produced during the year ended December 31, 2016 follows: Product Маx Units Sold 60,000 8,000 Units Produced Market Value at Split Off 100,000 8,000 P50 P10 YAN The joint costs incurred up to split-off point are: Direct materials P2,000,000 800,000 200,000 Direct labor Factory overhead The selling and administrative expense of Midnight Oil Corporation for the year ended December 31, 2016 is P1,000,000 exclusive of that for the by-product. Required: Compute the following: 1. What is the gross profit for the year if the net revenue from by-product is presented as other income? 2. What is the gross profit for the year if the net revenue from by-product is presented as additional sales revenue? 3. What is the net income for the year if the net revenue from by-product is presented as a deduction from the cost of goods sold? 4. What is the net income for the year if the net revenue from by-product is presented as a deduction from the total manufacturing cost of the main product?
Problem 14: Accounting of By-Product Midnight Oil Corporation manufactures Max product from a process that yielas a by-product called YAN. The by-product requires additional processing cost oI P30,000. The by-product will require selling and administrative expenses totaling P20,000. It is Midnight Oil's accounting policy to charge the joint costs to the main product only. Information concerning a batch produced during the year ended December 31, 2016 follows: Product Маx Units Sold 60,000 8,000 Units Produced Market Value at Split Off 100,000 8,000 P50 P10 YAN The joint costs incurred up to split-off point are: Direct materials P2,000,000 800,000 200,000 Direct labor Factory overhead The selling and administrative expense of Midnight Oil Corporation for the year ended December 31, 2016 is P1,000,000 exclusive of that for the by-product. Required: Compute the following: 1. What is the gross profit for the year if the net revenue from by-product is presented as other income? 2. What is the gross profit for the year if the net revenue from by-product is presented as additional sales revenue? 3. What is the net income for the year if the net revenue from by-product is presented as a deduction from the cost of goods sold? 4. What is the net income for the year if the net revenue from by-product is presented as a deduction from the total manufacturing cost of the main product?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Problem 14: Accounting of By-Product
Midnight Oil Corporation manufactures Max product from a process that yields
a by-product called YAN. The by-product requires additional processing cost of
P30,000. The by-product will require selling and administrative expenses
totaling P20,000. It is Midnight Oil's accounting policy to charge the joint costs
to the main product only. Information concerning a batch produced during the
year ended December 31, 2016 follows:
Units Sold
60,000
8,000
Units Produced
Product
Мах
Market Value at Split Off
100,000
8,000
P50
YAN
P10
The joint costs incurred up to split-off point are:
Direct materials
P2,000,000
800,000
200,000
Direct labor
Factory overhead
The selling and administrative expense
ended December 31, 2016 is P1,000,000 exclusive of that for the by-product.
night Oil Corporation for the year
Required: Compute the following:
1.
What is the gross profit for the year if the net revenue from by-product is
presented as other income?
2.
What is the gross profit for the year if the net revenue from by-product is
presented as additional sales revenue?
3.
What is the net income for the year if the net revenue from by-product is
presented as a deduction from the cost of goods sold?
4. What is the net income for the year if the net revenue from by-product is
presented as a deduction from the total manufacturing cost of the main
product?
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