Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Ramon Inc. manufactures a product that gives rise to a by-product called Great. The only costs associated with Great are additional processing costs of P1.00

Ramon Inc. manufactures a product that gives rise to a by-product called "Great". The only costs associated with Great are additional processing costs of P1.00 for each unit. Ramon accounts for "Great" sales first by deducting its separable costs from such sales and then by deducting this net amount from the cost of sales of the major product. For the past year 10,000 units of Great were produced which were sold for P3.00 each. Sales revenue and cost of goods sold from the main product were P2,500,000 and P2,000, 000 respectively. Compute the gross margin after considering the by-product sales and costs. 27. Using the same information above, if Ramon changes its method of accounting for Great sales by showing the net amount as "Other income," the effect on the gross margin would be:

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Survey of Accounting

Authors: Carl S Warren

5th Edition

9780538489737, 538749091, 538489731, 978-0538749091

More Books

Students also viewed these Accounting questions