Answer the Following Questions Using the Information Below:
the Green $\text { Direct Materials processed: } \quad 98,000 \text { gallons (after shrinkage) }$

question 127

Multiple Choice

Answer the following questions using the information below:
The Green 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:
$\text { Direct Materials processed: } \quad 98,000 \text { gallons (after shrinkage) }$
$\begin{array}{lll}\text { Proauction: } & \text { Condensed goat milk } & 42,500 \text { gallons } \\& \text { Skim goat milk } & 55,500 \text { gallons } \\\text { Sales: } & \text { Condensed goat milk } & \$ 3.50 \text { per gallon } \\&\text { skim goat milk } & \$ 2.50 \text { per gallon }\end{array}$ The costs of purchasing the of unprocessed goat milk and processing it up to the splitoff point to yield a total of 98,000 gallons of saleable product was $184,480. 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 54,200 gallons of skim goat ice cream, for an additional processing cost per usable gallon of $4. The product can be sold for $9 per gallon.
There are no beginning and ending inventory balances.
-What is the estimated net realizable value of Xyla at the splitoff point?

• A) $271,000
• B) $287,400
• C) $672,000
• D) $712,600

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