REQUIREMENTS:

I did part 1. I still need help on part 2 and 3.

Part 1 answers:

Tasty, Inc. is a producer of potato chips. A single production process at Tasty, 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 $505,000. Production and sales data are as follows: (Click the icon to view the production and sales data.) There were no beginning inventories on September 1, 2017. Read the requirements. Potato Chips Byproduct Production (in pounds) 48,000 8,300 Sales (in pounds) 38,400 $ 6,500 $ Selling Price per pound 20 5 1. What is the gross margin for Tasty, 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. 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 Production Sales method method $ 768,000 $ 768,000 32,500 768,000 800,500 505,000 505,000 41,500 0 463,500 505,000 92,700 101,000 370,800 404,000