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The Silly Goat Company processes unprocessed goat milk up to the split-off point where two products, condensed goat milk and skim goat milk result. The
The Silly Goat 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 March: Direct Materials processed: 102,000 gallons (after shrinkage) The costs of purchasing the unprocessed goat milk and processing it up to the split-off point to yield a total of 102,000 gallons of saleable product was $188,480. 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, Glycerna, for an additional processing cost of $4 per usable gallon. Glycerna can be sold for $20 per gallon. Skim goat milk can be processed further to yield 58,200 gallons of skim goat ice cream, for an additional processing cost per usable gallon of $4. The product can be sold for $12 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? A) $680,000 B) $672,000 C) $465,600 D) $476,000
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