Use the Information Below to Answer the Following Question(s)

question 187

Multiple Choice

Use the information below to answer the following question(s) .Beverage Drink Company processes direct materials up to the splitoff point, where two products, A and B, are obtained.The following information was collected for the month of July:
Direct materials processed: 2,500 litres (with 20 percent shrinkage)
Cost of purchasing 2,500 litres of direct materials and processing it up to the splitoff point to yield a total of 2,000 litres of good products was $4,500.There were no inventory balances of A and B.Product A may be processed further to yield 1,375 litres of Product Z5 for an additional processing cost of $150.Product Z5 is sold for $25.00 per litre.There was no beginning inventory and ending inventory was 125 litres.Product B may be processed further to yield 375 litres of Product W3 for an additional processing cost of $275.Product W3 is sold for $30.00 per litre.There was no beginning inventory and ending inventory was 25 litres.
-What is Product Z5's and Product W3's respective production cost per unit, assuming the company allocates joint costs on the basis of net realizable value?

• A)$2.05 and $3.88
• B)$2.42 and $2.78
• C)$2.49 and $2.88
• D)$2.60 and $3.61
• E)$2.86 and $3.68

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Definitions:

Sensory Adaptation

The mechanism where sensory detectors decrease in sensitivity to unchanging stimuli as time progresses.

Priming

A psychological phenomenon in which exposure to one stimulus influences a response to a subsequent stimulus, without conscious guidance or intention.

Bottom-up Processing

An approach to processing information that begins with the sensory receptors and works up to the brain's integration of sensory information.

Context Effects

The influence of environmental factors on one's perception of a stimulus, affecting how the stimulus is processed and understood.