In computing the cost of purchase of raw material consumed and cost of conversion, the value of by product is___________.

Added

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Deducted

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Neither added nor deducted

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Not taken into consideration

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Solution

The correct option is B Deducted
In computing the cost of purchase of raw material consumed and cost of conversion, the value of by product is deducted. To calculate the actual cost of goods the value of the by products obtained in the process of conversion of raw material into finished goods is to be deducted.

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