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.

 

Data table

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	Production (in pounds)	Sales (in pounds)	Selling Price per pound
Potato Chips	52,000	39,520	$28
Byproduct	8,400	7,000	$10

 

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 $510,000. Production and sales data are as follows:

 There were no beginning inventories on September 1, 2017.

 Read the requirements

Requirement 1. What is the gross margin for Enjoy, 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