Question
The Green Company processes unprocessed goat milk up to the splitoff point where two products, condensed goat milk and skim goat milk result. The following
The Green 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: |
100500 gallons (after shrinkage) | |
Production: | Condensed goat milk |
45000 gallons |
Skim goat milk |
55000 gallons | |
Sales: | Condensed goat milk |
$4.75 per gallon |
Skim goat milk |
$4.25 per gallon |
The costs of purchasing the of unprocessed goat milk and processing it up to the splitoffpoint to yield a total of 100500 gallons of saleable product was 192480. There were no inventory balances of either product. Condensed goat milk may be processed further to yield 44500 gallons (the remainder is shrinkage) of a medicinal milk product, Xyla, for an additional processing cost of $4 per usable gallon. Xyla can be sold for $22 per gallon.
Skim goat milk can be processed further to yield 54200 gallons of skim goat milk ice cream, for an additional processing cost per usable gallon of $4. The product can be sold for $9 per gallon.
There are no beginning and ending inventory balances.
What is the estimated net realizable value of the skim goat milk ice cream at the splitoffpoint?
Question content area bottom
Part 1
A.$ 271,000
B.$ 801,000
C.$ 277,500
D.$ 810,000
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