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

ACCOUNTING

Multiple Choice

Sparta Company processes 15,000 gallons of direct materials to produce two products, Product X and Product Y. Product X sells for $4 per gallon and Product Y, the main product, sells for $50 per gallon. The following information is for August:

Beginning Ending

Production Sales Inventory Inventory

Product X: 4,375 4,000 0 375

Product Y: 10,000 9,625 125 500


The manufacturing costs totaled $15,000.

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?

a. $0

b. $1,500

c. $16,000

d. $17,500

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