Solution-What the effect on the gross margin would be

What the effect on the gross margin would be

Reference no: EM132561287

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.

Question 1: Compute the gross margin after considering the by-product sales and costs.

Question 2: 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:

Reference no: EM132561287

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What the effect on the gross margin would be : 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

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What the effect on the gross margin would be

Reference no: EM132561287

Reference no: EM132561287

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