Reference no: EM132775839
Pink Inc. manufactures Zen products from a process that yield a by-product called YAN. The by-product requires additional processing cost of P30,000. The by-product will require selling and administrative expenses totalling P20,000. It is the company's policy to charge the joint costs to the main product only.
Information concerning a batch produced during the year ended December 31, 202x. follows:
Units produced: 100,0000
Units produced: 8,000
Units sold: 8,000
The joint costs incurred up to the split-off point are:
Raw materials: P2,000,000
Direct labor: 800,000
Factory overhead: 200,000
The selling and administrative expense of EEE Inc. is P1,000,000 exclusive of that for the by-product.
Problem a: Compute:
1. Gross profit if the net revenue from the by-product is presented as other income
2. Gross profit if the net revenue from the by-product is presented as additional sales revenue
3. Net income if the net revenue from the by-product is presented as deduction from cost of goods sold
4. Net income if the net revenue from the by-product is presented as deduction from the total manufacturing cost of the main product
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