The Laguna Chemical Company produces a product knows as Choco from which by-product results. This by-product can
Question:
The Laguna Chemical Company produces a product knows as "Choco" from which by-product results. This by-product can be sold at P1.00 a pound. The manufacturing costs of the main products and by-product up to the point of separation for the three-month period ending March 31, 2019 follows:
MaterialsP 30,000
LaborP 17,400
OverheadP 17,400
The units processed were 20,000 pounds of the main product and 2,000 pounds of the by-product. During the period, 18,000 pounds of the main product were sold at P10.00 a pound and 1,000 pounds of the by-product. Selling and administrative expenses applicable to the main product is 30% of sales.
Required:
1.Income statements assuming that the sale of the by-product is treated as income, using the different methods
2.Income statement assuming that the sales of the by-product is treated as reduction of the production of the production cost of the main product
3.Compute the unit costs of the main product for No.1 and No. 2