Question
The Morton 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 Morton 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: 65,000 litres (shrinkage was 10%) Production: condensed goat milk 26,100 litres skim goat milk 32,400 litres Sales: condensed goat milk $3.50 per litre skim goat milk $2.50 per litre The costs of purchasing the 65,000 litres of unprocessed goat milk and processing it up to the split-off point to yield a total of 58,500 litres of salable product was $72,240. There were no inventory balances of either product. Condensed goat milk may be processed further to yield 19,500 litres (the remainder is shrinkage) of a medicinal milk product, Xyla, for an additional processing cost of $3 per usable litre. Xyla can be sold for $18 per litre. Skim goat milk can be processed further to yield 28,100 litres of skim goat ice cream, for an additional processing cost per usable litre of $2.50. The product can be sold for $9 per litre. There are no beginning and ending inventory balances. Using the sales value at split-off method, what is the gross margin percentage for condensed goat milk at the split-off point? 38.2% 21.1% 41.9% 55.1% *58.1%
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