PIOLO produces a main product TEDDY BEAR together with a by-product WIRE. There was no beginning inventoryduring the current month. The following information were available:                                                       Produced       Sold TEDDY BEAR          1,000            800 WIRE                           250              75 Joint cost amounted to P125,000 during the month. One unit of TEDDY BEAR can be sold for P200, and one unit of WIRE can be sold for P100 after incurring P20 disposal cost. Operating expenses amounted to P10,000. How much is the net income if the by-product is recognized when produced using the netrealizable value method

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Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.