Montreal Dairy Products Corp buys full cream and refines it into butter and buttermilk. From each liter of cream, Montreal produces 500 (1/2 kg.) grams of butter and two cups of buttermilk. During November Montreal purchased 10,000 liters of cream for $25,000. Montreal spent another $15,000 on the churning process to separate the cream into butter and buttermilk. Butter can be immediately sold for $4 per kilogram and buttermilk could be sold immediately for $2 per cup. There are 1000 grams in one kilogram and 5 cups of buttermilk weigh one kilogram. At management's discretion, the butter can be further processed into spreadable butter by mixing it with canola oil incurring an extra cost of $.50 per KG of butter processed. This process results in two tubs of spreadable butter for each kilogram of butter processed. Each tub of spreadable butter sells for $6.00.
By diluting the buttermilk, one cup of the buttermilk can be processed into three cups of skim milk. The processing costs are $1 for each cup of buttermilk processed, but the skim milk can be sold for $1.50 per cup.
REQUIRED:
1 Allocate the joint cost of the cream if the products are not processed furth using the sales value at split-off method and then the physical-measure met
2 Allocate the joint cost of the cream if the products are processed further using the net realizable value method.