By-products recorded at net realizable value SMZ Company makes resins for commer- cial customers. One production process
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By-products recorded at net realizable value SMZ Company makes resins for commer- cial customers. One production process yields a by-product called EP-404. This by-product sells for $3.00 per gallon and typically requires $1.20 per gallon processing cost after the by-product separates from the production of the main product. Additional processing costs are 50 percent for direct materials, 30 percent for direct labor, and 20 percent for applied overhead. During the past week, 4,000 gallons of EP-404 were manufactured. The company uses the net realizable value method to account for by-product costs.
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