Answer the Following Question(s)using the Information Below

question 22

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.
-What is the estimated net realizable value of Xyla at the splitoff point?

• A)$182,650
• B)$252,900
• C)$292,500
• D)$351,000
• E)$280,750

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Definitions:

Increasing Inputs

Refers to a situation in production or economics where there is a rise in the resources used to produce goods or services.

Holding Outputs

The act of retaining finished goods or services before they are sold or delivered to the next stage of the supply chain or to customers.

Assembly Line

A manufacturing approach in which items are sequentially joined to create a finished product in an efficient way.