ABC Corp. manufactures a product that yields the by-product, “Y”. The only cost associated with Y are selling costs of P.10 for each unit sold. ABC accounts for sales of Y by deducting Y’s separable costs from Y’s sales, and then deducting this net amount from the major product’s cost of goods sold. Y’s sales were 100,000 units at P1 each. If ABC changes its method of accounting for Y’s sales by showing the net amount as additional sales revenue, then ABC’s gross margin would: 

a. Increase by P90,000 

b. Increase by 100,000 

c. Increase by 110,000 

d. Be unaffected

Answer rating: 100% (QA)

1 d Be Unaffected Currently ABC Corp is reducing its net profit of byproduc... View the full answer