Torid Company processes 18,700 gallons of direct materials to produce two products, Product X and Product Y. Product X sells for $10 per gallon and Product Y, the main product, sells for $150 per gallon. The following information is for December:

The manufacturing costs totalled $30,000.
How much is the ending inventory for the byproduct if byproducts are recognized in the general ledger at the point of sale?
A) $0
B) $1750
C) $3000
D) $26,250

Question

Torid Company processes 18,700 gallons of direct materials to produce two products, Product X and Product Y. Product X sells for $10 per gallon and Product Y, the main product, sells for $150 per gallon. The following information is for December:

The manufacturing costs totalled $30,000.
How much is the ending inventory for the byproduct if byproducts are recognized in the general ledger at the point of sale?
A) $0 
B) $1750 
C) $3000 
D) $26,250

Quizplus · Accepted Answer

Byproducts are not recognized until they are sold. Therefore, the ending inventory is always $0.

Torid Company Processes 18,700 Gallons of Direct Materials to Produce