Answer the Following Question(s)using the Information Below

question 39

Multiple Choice

Answer the following question(s) using the information below:
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: The costs of purchasing the 65,000 litres of unprocessed goat milk and processing it up to the splitoff 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.
-The constant gross margin percentage NRV method of joint cost allocation

• A)involves allocating costs in such a way that maintaining the same gross margin percentage for each product that was obtained in prior years.
• B)involves allocating costs in such a way that the overall gross margin percentage is identical for the individual products.
• C)is the same as the estimated NRV method.
• D)is the same as the sales value at splitoff method.
• E)will result in different gross margins for each product.

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Definitions:

Sand Dunes

Hills of sand formed by the wind, often found in deserts and along beaches.

Dry Climates

Climatic regions characterized by low precipitation, leading to arid or semi-arid conditions.

Kilometers

A unit of length in the metric system, equal to 1,000 meters or approximately 0.62 miles, used to measure distance.

Deposited

The process by which sediments, minerals, and other substances are laid down or settled in a new location.