ABC Company Manufacturing Furniture. As a normal output of the manufacturing process, the company will have the main product (wooden doors) and wood chips. The company considers the wood chips as a by-product. In 2020, the company produced 10,000 units of the main product and 5,000 KG of wood chips and sold 9,000 units of the main product and 4,000 KG of wood chips. The sales price for the main product is $50 / unit. Wood chips are sold usually at $1.2/KG with $0.20/KG expenses to sell.

Required:

1. Calculate the cost per unit using the two approaches for by-product (at production or at the sale)?
2. Calculate the operating income using the two approaches.

Answer rating: 100% (QA)

1 Cost per unit at production Total cost of manufacturing main product Number of main product units ... View the full answer