Question
In making frozen hash browns and potato chips, Patatas, Inc. generates potato skins as a by-product. It sells the potato skins to restaurants for use
In making frozen hash browns and potato chips, Patatas, Inc. generates potato skins as a by-product. It sells the potato skins to restaurants for use as appetizers. The processing and disposal costs associated with the sale of the product are P0.10 per kilo of potato skins. During February 2021, Patatas, Inc. produced and sold 100,000 kilos of potato skins for P11,825. In addition, the joint costs for hash browns and potato chips was P40,000. In February 2021, 80% of all joint production was sold for P90,000. Other operating expenses for the month were P6,500.
Assuming that the net realizable value of the by-product is subtracted from the joint cost of the main products, how much is the cost allocated to the by-product?
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