A joint input costing $500 results in four distinct products at the point of split-off. Products J, K and L are main products, and product M is a by-product. Relevant data follows: $\begin{array}{l}
&\text { Sales Value }&\text { Separable }&\text { Sales Value After }\
\text { Product }&\text { at Split-Off }& \text { Cost } &\text { Further Processing }\
\text { J (main) } &\$200&\$100&\$400\
\text {K (main) }&300&200&600 \
\text {L (main) } &100&-&-\
\text {M (by-product) }&20&10&40
\end{array}$
If the revenue from product M is recognized at the time of sale, what amount will be recorded as the cost of product M inventory at the time of split-off?
A) $0
B) $10
C) $20
D) $30

Question

A joint input costing $500 results in four distinct products at the point of split-off. Products J, K and L are main products, and product M is a by-product. Relevant data follows: $\begin{array}{l}
&\text { Sales Value }&\text { Separable }&\text { Sales Value After }\
\text { Product }&\text { at Split-Off }& \text { Cost } &\text { Further Processing }\
 \text { J (main) } &\$200&\$100&\$400\
 \text {K (main) }&300&200&600 \
 \text {L (main) } &100&-&-\
 \text {M (by-product) }&20&10&40
\end{array}$
 If the revenue from product M is recognized at the time of sale, what amount will be recorded as the cost of product M inventory at the time of split-off?
A) $0
B) $10
C) $20
D) $30

Quizplus · Accepted Answer

According to the information given, product M is a by-product and its revenue is recognized at the time of sale. Therefore, there will be no cost recorded for product M inventory at the time of split-off as it is considered a by-product and its costs are allocated to the main products.

A Joint Input Costing $500 Results in Four Distinct Products