Computing the cost of a by-product by the reversal cost method; preparing a cost of production report. Production data is given for the Screening Department of the O’Shea Products Company for June 19X9:

In the Screening Department, a by-product is recovered and is further processed to form a chemical called Milron. For each metric ton of by-product recovered, it is necessary to add an additional metric ton of filler to form Milron. The filler costs $5 per metric ton. Each metric ton of Milron requires additional labor costs of $1 and manufacturing overhead of $1.50. (Note that for each metric ton of by-product recovered, 2 metric tons of Milron will be produced.) Milron has an established selling price of $12 per metric ton. The normal net profit margin of the company is 8 percent of sales. The estimated selling and administrative expenses are $1 per metric ton of Milron.
Instructions 1. Compute the cost to be assigned to the 250 metric tons of by-product before separation, using the reversal cost method.
2. Prepare a cost of production report for the Screening Department for the month of June 19X9, based on the above data.

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Work in Process-Beginning Costs in Current Month Transferred In From Prior Department Costs Added in Current Department Materials Labor Manufacturing Overhead Cost -0- $136,000 -0- 11,900 17,500 Units Work in Process-Beginning -0- Transferred In From Prior Department 2,000 metric tons Transferred Out to Finished Goods 1,750 metric tons Amount of By-Product Recovered Work in Process-Ending 250 metric tons -0-