Athens Company processes 15,000 gallons of direct materials to produce two produ

Question

Athens Company processes 15,000 gallons of direct materials to produce two products, Product X and Product Y. Product X sells for $8 per gallon and Product Y, the main product, sells for $100 per gallon. The following information is for August:
-----------Production------sales------Beginning inv------Ending inventory
Product x: 4375----------4000------------0-------------------375--
product y: 10000---------9625-----------125----------------500--

The manufacturing costs totaled $30,000.


What is the byproduct's net revenue reduction if byproducts are recognized in the general ledger during production and their revenues are a reduction of cost?

Explanation / Answer

Sales of byproduct x price = 4,000 x 8 = 32,000

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