Question
The Dairy Production Company purchases and processes unprocessed goat milk up to the split-off point where two products, condensed goat milk and skim goat milk
The Dairy Production Company purchases and processes unprocessed goat milk up to the split-off point where two products, condensed goat milk and skim goat milk result. The following information was collected for the month of August 2023:
Production: Condensed goat milk 45,500 gallons
Skim goat milk 58,500 gallons
Sales: Condensed goat milk $5.00 per gallon
Skim goat milk $4.50 per gallon
The costs of purchasing the unprocessed goat milk and processing it up to the split-off point was $188050. There were no inventory balances of either product. The condensed goat milk may be processed further to yield 44902 gallons (the remainder is shrinkage) of a medicinal milk product, CGM100, for an additional processing cost of $4 per usable gallon. CGM100 can be sold for $16 per gallon.
Skim goat milk can be processed further to yield 57160 gallons of skim goat ice cream, for an additional processing cost per usable gallon of $4. The product can be sold for $10 per gallon.
There are no beginning and ending inventory balances.
Using the estimated net realizable value method of allocating joint costs, compute the amount of the joint costs that would be allocated to the product CGM100.
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