Compute the value of a by-product using the normal net profit method. (Obj. 5). In the Decomposing Department of Krum Com-

/pany, a by-product Is removed. The material is further processed and then sold. The company uses the normal net profit method to account for the by-product. Data for December 19X9 follow.

Amount of by-product removed, 10,000 pounds Estimated sales price of by-product, S2 per pound Estimated manufacturing cost after separation, S.60 per pound Estimated selling and administrative expenses, 20 percent of sales price Estimated normal net profit, 10 percent of sales price Compute the value to be assigned to the by-product and removed from Work in Process at the point of separation.

LO.1