Question
[CPA Adapted] Mohler Corporation manufactures a product that yields the byproduct Jep. The only costs associated with Jep are selling costs of $0.10 for each
[CPA Adapted] Mohler Corporation manufactures a product that yields the byproduct Jep. The only costs associated with Jep are selling costs of $0.10 for each unit sold. Mohler accounts for sales of Jep by deducting Jeps separable costs from Jeps sales and then deducting this net amount from the major products cost of goods sold. Jeps sales were 200,000 units at $1.00 each. If Mohler changes its method of accounting for Jeps sales of showing the net amount as additional sales revenue, how would that affect Mohlers gross margin?
I know the answer, but I need a clearly explanation. Thanks a lot .
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