1.) A company has sales of $40,000 and COGS of $21,000 on their primary product
ID: 2468171 • Letter: 1
Question
1.) A company has sales of $40,000 and COGS of $21,000 on their primary product during January. A by-product, with a net sales value of $800, is produced during January as well. Sales of the by-product totaled $400 in revenue for January. If the net realizable value method of accounting for by-products is used, the gross profit for the month would equal __________.
2.) A company has sales of $40,000 and COGS of $21,000 on their primary product during January. A by-product, with a net sales value of $800, is produced during January as well. Sales of the by-product totaled $400 in revenue for January. If the manufacturing cost recovery method of accounting for by-products is used, the gross profit for the month would equal __________.
Explanation / Answer
1.) A company has sales of $40,000 and COGS of $21,000 on their primary product during January. A by-product, with a net sales value of $800, is produced during January as well. Sales of the by-product totaled $400 in revenue for January.
If the net realizable value method of accounting for by-products is used, then
Gross profit:
Sales = $40,000
Add: By product sale = $ 400
Gross Sales = $ 40,400
Less: COGS = $21,000
Gross Profit = $ 19400
2.) A company has sales of $40,000 and COGS of $21,000 on their primary product during January. A by-product, with a net sales value of $800, is produced during January as well. Sales of the by-product totaled $400 in revenue for January. If the manufacturing cost recovery method of accounting for by-products is used then,
Gross profit :
Sales of primary product =$40000
Add: Realisable net sales of By-product =$ 800
Gross Sales =$40800
Less: COGS with Manufacturing cost =$21000
Gross Profit =$19800
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