Question
Appledore Inc. processes apples up to the split-off point, where two products, applesauce and apple juice, result. The following information was collected for the month
Appledore Inc. processes apples up to the split-off point, where two products, applesauce and apple juice, result. The following information was collected for the month of September:
Production:
Applesauce 135,000 litres
Apple juice 165,000 litres
Sales:
Applesauce $3.75 per litre
Apple juice $2.45 per litre
Apples processed: 220,000 kilograms
Purchase cost of 220,000 kilograms and processing costs to split-off point: $165,400
Yield: 300,000 litres of saleable product
Applesauce may be processed further to yield 25,500 kilograms of dried apple candy (the remainder is shrinkage). The additional processing cost is $15.65 per kilogram of candy. The candy can be sold for $37 a kilogram.
Apple juice can be processed further to produce 185,000 litres of a sparkling fancy apple drink. The additional content is sparkling water. The additional processing cost per usable litre of drink is $3.05. The product can be sold for $6 per litre.
There are no beginning and ending inventory balances.
How much is Appledore's profit if only the apple juice is processed further into fancy apple drink, and all units of applesauce and fancy apple drink are sold?
a) $745,100
b) $783,275
c) $886,600
d) $924,775
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