In Department III of SAM Company, a portion of the materials (a by- product) is removed further processed and sold. The Company uses the reversal cost method to account for the by-product. Data for June include: Amount of by-product removed is 2000 units; Estimated sales price of by-product after processing further is P1.20/unit. Estimated processing cost after separation is P0.30 per unit and estimated selling expenses is 10% of the sales price. The estimated profit margin is 5% of the sales price.

QUESTIONS:

1. What is the total cost of the by-product?

2. What is the gain (loss) on sale of the by-product if all of the units are sold at P1.50?

(Solutions must be in good accounting form. Excel form would be good! Account Titles on the left, Amounts on the right. Put tables if necessary. Avoid parenthetical solutions. Thanks a lot!)