Tasty, Inc. is a producer of potato chips. A single production process at Tasty yields potato chips as the main product and a by-product (Bits O' Chips) that can be sold as a snack. Both prodcuts are fully processed by the split-off point. There are no separable costs.
For September, the total cost of manufacturing was $500,000.

a. What is the gross profit for September under the Net Realizable Value Method?
b. What is the gross profit for September under the Manufacturing Cost Reduction Method?
c. What is the total inventory value at 9/30 under the Net Realizable Value Method?
d. What is the total inventory value at 9/30 under the Manufacturing Cost Reduction Method?

Transcribed Image Text:

In Pounds In Pounds Sales 42,640 6,500 Productions Sales price/lb Potato Chips 50,000 $16 By-product 10,000 $10