Accounting for a main product and a byproduct. (Cheatham and Green, adapted) yum, Inc. is a producer of potato chips. A single production process at yum, Inc. yields potato chips as the main product and a byproduct that can also be sold as a snack. Both products are fully processed by the splitoff point and there are no separable costs. For September 2009, the cost of operations is $480,000. Production and sales data are as follows:

There were no beginning inventories on September 1, 2009.

1. What is the gross margin for yum, Inc. under the production method and the sales method of byproduct accounting?

2. What are the inventory costs reported in the balance sheet on September 30, 2009, for the main product and byproduct under the two methods of byproduct accounting in requirement 1?

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Production (in Pounds) 40,000 8,000 Sales (in Pounds) 32,000 Selling Price per Pound Main product: Potato Chips S20 Byproduct 5,600