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The Green Company processes unprocessed goat milk up to the split-off point where two products, condensed goat milk and skim goat milk result. The following
The Green Company 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 October Direct materials processed: 100,000 gallons (after shrinkage) Production: Condensed goat milk 43,500 gallons Skim goat milk 56,500 gallons Sales: Condensed goat milk $4.50 per gallon Skim goat milk $3.50 per gallon The costs of purchasing the of unprocessed goat milk and processing it up to the split-off point to yield a total of 100,000 gallons of saleable product was $185,480. There were no inventory balances of either product. Condensed goat milk may be processed further to yield 43,000 gallons (the remainder is shrinkage) of a medicinal milk product, Xyla, for an additional processing cost of $3 per usable gallon. Xyla can be sold for $17 per gallon. Skim goat milk can be processed further to yield 55,200 gallons of skim goat ice cream, for an additional processing cost per usable gallon of $3. The product can be sold for $8 per gallon There are no beginning and ending inventory balances. What is the estimated net realizable value of the skim goat ice cream at the split - off point? O A. $602,000 OB. $282,500 OC. $609,000 OD. $276,000
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