A cc ounting f or a main p r oduct and a by-p r oduct. Claude Deux-Bussy is the owner and operator

A cc ounting f or a main p r oduct and a by-p r oduct.

Claude Deux-Bussy is the owner and operator of Boissons Barbe-Bleue Sarl, a bulk soft- drink producer. A single production process yields two bulk soft drinks, Pelléas (the main product) and Mélisande (the by-product). Both products are fully processed at the split-off point and there are no separable costs.

Summary data for September 2007 are as follows:

● Cost of soft-drink operations = €120 000

● Production and sales data

Production Sales Selling price

	(litres)	(litres)	per litre
Main product (Pelléas)	40 000	32 000	€20.00
By-product (Mélisande)	8 000	5 600	2.00

There were no opening stocks on 1 September 2004. The following is an overview of operations:

Required

1 What is the gross margin for Boissons Barbe-Bleue under methods A, B, C and D of by- product accounting described on p. 187 of this chapter?

2 What are the stock amounts reported in the balance sheet on 30 September 2007 for Pelléas and Mélisande under each of the four methods of by-product accounting cited in requirement 1?

3 Which method would you recommend Boissons Barbe-Bleue to use? Explain.