farmers dairy purchases raw milk from individual farms and processes it until the split-off point, where two products(cream and liquid skim milk) emerge.

Farmer's Dairy purchases raw milk from individual farms and processes it until the split-off point, where two products (cream and liquid skim milk) emerge. These two products can be sold, in their raw form, at the split-off point to an independent company. The joint cost of the raw milk is $400,000. If the cream and liquid skim milk are sold at the split-off point, the cream would yield 25,000 gallons at $8 per gallon. The liquid skim milk would yield 75,000 gallons at $4 per gallon. If Farmer's Dairy does not sell its products at the split-off point, the cream can be refined into 20,000 gallons of butter cream at a cost of $280,000. The 20,000 gallons of butter cream will sell for $25 per gallon. Future processing of the liquid skim milk will result in 50,000 gallons of condensed milk at a processing cost of $520,000. The condensed milk sells for $22 per gallon. Required: 1. Allocate joint costs based on sales values at split-off point. If products are sold at split-off point profit would be? 2. Allocate joint costs based on physical quantities method. What is the profit at this point? 3. Allocate joint costs based on net realizable value method. If goods are processed future what 4. Should Farmer's Dairy sell or process future based on above information why or why not? is overall profit? 5. If a bi-product at split-off can be sold for $30,000, what are the accounting options as to treatment? How would this impact your answer in #3 above? Redo answer with revised numbers