The Green Company Processes Unprocessed Goat Milk Up to the Split-Off

question 42

Multiple Choice

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:

The costs of purchasing the of 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, 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 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) $465,600
• B) $476,000
• C) $672,000
• D) $680,000

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Definitions:

Dishabituation

The renewal of attention or response to a stimulus that had previously become habitual or ignored, triggered by a significant change in the stimulus.

Habituated Response

An action or reaction that becomes less pronounced over time as a result of repeated exposure to a specific stimulus.

Stimulation

The act of encouraging development or activity in biological, psychological, or physical systems.

Shape Constancy

Recognition that an object remains the same even though its orientation to the viewer changes.