(Accounting for by-products) Alabama Mills Company manufactures various wood products that yield sawdust as a by-product. The only costs associated with the sawdust are selling costs of $5 per ton sold. The company accounts for sales of sawdust by deducting sawdust’s net realizable value from the major product’s cost of goods sold. Sawdust sales in 1997 were 12,000 tons at $40 each. If Ala¬ bama Mills changes its method of accounting lor sawdust sales to show the net realizable value as other revenue (presented at the bottom of the income state¬ ment), how would its gross margin be affected?

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