16 - Cost Allocation: Joint Products an

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Inc. is a producer of potato chips. A single production process at

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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, the cost of operations is

$490,000.

Production and sales data are as follows:

Main product: Potato Chips Byproduct

Production (in kg) 42,000 8,700

Sales (in kg) 40,000 7,000

Selling Price per kg $18 $5

There were no beginning inventories on September 1.

Requirement 1. What is the gross margin for

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Inc. under the production method and the sales method of byproduct accounting?Calculate the gross margin for

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Inc. under the production method and then the sales method of byproduct accounting. (Only complete the necessary boxes. For the main product inventory: calculate the proportion of inventory first, then complete your calculation. Hold all decimals for the proportions and round your final answer to the nearest whole dollar.)

	Production
	Method
Revenues
Main product
Byproduct
Total revenues
Cost of goods sold
Total manufacturing costs
Deduct value of byproduct production
Net manufacturing costs
Deduct main product inventory
Cost of goods sold
Gross margin

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