Coconuts N More produces two joint products, Coconut Milk and Coconut Meat. The company uses the leftover Coconut Skin as a by-product. All three are produced from joint costs of $75,000: direct materials amounting to $50,000 and another $25,000 for direct labor and manufacturing overhead. Beginning inventory for all three products is zero. Information for production of the product is as follows: How much in sales and cost of goods sold will be assigned to the Coconut Skin, respectively, using the production method?
A)$0, $0.
B)$2,000, $2,250.
C)$2,250, $2,000.
D)$2,000, $0.

Question

Coconuts N More produces two joint products, Coconut Milk and Coconut Meat. The company uses the leftover Coconut Skin as a by-product. All three are produced from joint costs of $75,000: direct materials amounting to $50,000 and another $25,000 for direct labor and manufacturing overhead. Beginning inventory for all three products is zero. Information for production of the product is as follows:  How much in sales and cost of goods sold will be assigned to the Coconut Skin, respectively, using the production method?
A)$0, $0. 
B)$2,000, $2,250. 
C)$2,250, $2,000. 
D)$2,000, $0.

Quizplus · Accepted Answer

$0, $0 - by-products are not assigned to sales or COGS

Coconuts N More Produces Two Joint Products, Coconut Milk and Coconut