Computing the value assigned to a by-product by the reversal cost method.

In the Packaging Department of the Valenti Company, scrap materials (a byproduct)

are removed, further processed, and sold. The company uses the reversal cost method to account for the by-product. Data for April 19X2 follow on page 366. Compute the value to be assigned to the by-product and removed from Work in Process at the point of separation.

Amount of by-product removed, 4,300 kilograms Estimated sales price of by-product after further processing, 70 cents per kilogram Estimated processing cost after separation, 12 cents per kilogram Estimated selling expenses, 10 pecent of sales price Estimated normal profit margin, 10 percent of sales price