Under an acceptable method of costing by-products,inventory costs of the by-product are based on the portion of the joint production cost allocated to the by-product
A)but any subsequent processing cost is debited to the cost of the main product.
B)but any subsequent processing cost is debited to revenue of the main product.
C)plus any subsequent processing cost.
D)minus any subsequent processing cost.

Question

Quizplus · Accepted Answer

Under an acceptable method of costing by-products, inventory costs of the by-product are based on the portion of the joint production cost allocated to the by-product plus any subsequent processing cost. This means that any additional processing cost incurred for the by-product after it has been separated from the main product is added to its inventory cost. This is because the by-product's sale price should reflect its total cost including any additional processing cost.

Under an Acceptable Method of Costing By-Products,inventory Costs of the By-Product