Use the Information Below to Answer the Following Question(s)

question 167

Multiple Choice

Use the information below to answer the following question(s) .Troy Company processes 15,000 litres of direct materials to produce two products, Product X and Product Y.Product X, a byproduct, sells for $4 per litre, and Product Y, the main product, sells for $50 per litre.The following information is for August:
The manufacturing costs totalled $95,000.
-What is the net effect to the income statement for the recognition of the byproduct, if byproducts are recognized when production is completed, and the company uses FIFO?

• A)$17,500
• B)$16,000
• C)$16,844
• D)$17,300
• E)$16,625

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Definitions:

Consumer Surplus

The difference between the maximum price consumers are willing to pay and the price they actually pay. It is the net gain derived by the buyers of the good.

Cell-Phone Service

A service provided by telecommunications companies that enables mobile phone users to make and receive calls, texts, and use data.

Utility-Maximizing

A behavioral principle where consumers allocate their income to purchase a mix of goods and services that provides the highest overall utility.

Last Dollar

The final unit of currency spent or invested in a particular context, emphasizing its potential impact or value.