The Morton 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: 98,000 gallons (after shrinkage )

Production:

condensed goat milk 42,500 gallons

skim goat milk 55,500 gallons

Sales:

condensed goat milk $3.50 per gallon

skim goat milk $2.50 per gallon

The costs of purchasing the unprocessed goat milk and processing it up to the split off point to yield a total of 98,000 gallons of saleable product was $184,480. There were no inventory balances of either product.

Condensed goat milk may be processed further to yield 42,000 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 $20 per gallon.

Skim goat milk can be processed further to yield 54,200 gallons of skim goat ice cream, for an additional processing cost per usable gallon of $4. The product can be sold for $9 per gallon

???

How much (if any) extra income would Morton earn if it produced and sold all of the Xyla from the condensed goat milk? Allocate joint processing costs based upon relative sales value on the splitoff. (Extra income means income in excess of what Morton would have earned from selling condensed goat milk.) ?

a) $523,250

b) $576,552

C) $132,250

D) $181,968