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The Gows Company processes unprocessed goat milk up to the splitoff point where two products, condensed goat milk and skim goat milk result. The following
The Gows Company processes unprocessed goat milk up to the splitoff point where two products, condensed goat milk and skim goat milk result. The following information was collected for the month of October: Direct Materials processed: 130,000 gallons (shrinkage was 10%) condensed goat milk skim goat milk 52,200 gallons 64,800 gallons S3.50 per gallon S2.50 per gallon The costs of purchasing the 130,000 gallons of unprocessed goat milk and processing it up to the splitoff point to yield a total of 117,000 gallons of salable product was $144,480. There were no inventory balances of either product Condensed goat milk may be processed further to yield 39,000 gallons (the remainder is shrinkage) of a medicinal milk product, Xyla, for an additional processing cost of S3 per usable gallon. Xyla can be sold for S18 per gallon. Skim goat milk can be processed further to yield 56,200 gallons of skim goat ice cream, for an additional processing cost per usable gallon of $2.50. The product can be sold for S9 per gallon. a. Using the sales value at splitoff method, allocate the joint cost (S144,480) to condensed goat milk and skim goat milk. kim goat milk Sales value at spl Weights oint costs allocated b. Using the sales value at splitoff method, calculate gross-margin percentage for skim goat milk at the splitoff point. c. Using net realizable value method, allocate the joint cost (S144,480) to condensed goat milk and skim goat milk skim goat milk Final sales value Net realizable value at split-off Weights oint costs allocated d. How much (if any) extra income would the company earn if it produced and sold all of the Xyla from the condensed goat milk (instead of selling condensed goat milk)
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