Problem: Troy Company processes 15,000 litres of direct materials to produce two products, Product X and Product Y. Product X sells for $4 per litre, and Product Y, the main product, sells for $50 per litre. The following information is for August:
Beginning Ending
Production Sales Inventory Inventory___
Product X 4,375 4,000 0 375
Product Y 10,000 9,625 125 500
The manufacturing costs totaled $15,000.
Q1. How much is the ending inventory reduction for the byproduct if byproducts are recognized in the general ledger at NRV during production?
a. $16,000 b. $0 c. $17,500 d. $1,500 e. $14,375
Q2. How much is the ending inventory reduction for the byproduct if byproducts are recognized in the general ledger at the point of sale?
a. $563 b. $17,500 c. $16,000 d. $1,500 e. $0