Claude Deux-Bussy is the owner and operator of Boissons Barbe-Bleue Sarl, a bulk soft-drink producer. A single production process yields two bulk soft drinks, Pelléas (the main product) and Mélisande (the by-product). Both products are fully processed at the split off point and there are no separable costs.

 Summary data for September 2018 are as follows:

● Cost of soft-drink operations = €120,000

● Production and sales data 

There were no opening stocks on 1 September 2018. The following is an overview of operations:

Required 

1. What is the gross margin for Boissons Barbe-Bleue under methods A, B, C and D of by-product accounting described in this chapter(on p. 168)? 

2. What are the stock amounts reported in the balance sheet on 30 September 2018 for Pelléas and Mélisande under each of the four methods of by product accounting cited in requirement 1? 

3. Which method would you recommend Boissons Barbe-Bleue to use? Explain.

Transcribed Image Text:

Production Sales Selling price per litre (litres) (litres) Main product (Pelléas) By-product (Mélisande) 40 000 32 000 €20.00 8 000 5 600 2.00