Enjoy Inc. is a producer of potato chips. A single production process at Enjoy Inc., yields potato chips as the main product, as well as a byproduct that can be sold as a snack. Both products are fully processed by the splitoff point, and there are no separable costs. For September 2017 the cost of operations is $485,000.

Production and sales data are as follows:

Production (in pounds)			Sales (in pounds)			Selling Price per Pound
Potato Chips		54,000			41,040			$16
Byproduct		8,000			6,500			$10

There were no beginning inventories on September 1,2017.

.	What is the gross margin for Enjoy 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, 2017 for the main product and byproduct under the two methods of byproduct accounting in requirement 1?
3.	Prepare the journal entries to record the byproduct activities under (a) the production method and (b) the sales method. Briefly discuss the effects on the financial statements.

Requirement 1. What is the gross margin for

EnjoyEnjoy,

Inc., under the production method and the sales method of byproduct accounting? (Enter a "0" for any cells with a zero balance. For the main product inventory: Calculate the proportion of inventory first, then complete your calculation.)

	Production
	method
Revenues
Main product (potato chips)
Byproduct (snack)
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