Question:
Reversal Cost Method for By-Products. The Marksberry Manufacturing Company manufactures one main product and two by-products. Data for the month of July are:
|
Main Product
|
By-Product A
|
By-Product B
|
|
Sales
|
$150,000
|
$12,000
|
$7,000
|
|
Manufacturing costs before separation
|
75,000
|
|
|
|
Manufacturing costs after separation.
|
23,000
|
2,200
|
1,800
|
|
Marketing and administrative
|
|
|
expenses
|
12,000
|
1,500
|
1,100
|
Required: An income statement assuming no beginning or ending inventories and using the reversal cost method for the by-products, allowing 15% net profit for By-Product A and 12fc net profit for By-Product B