Cola Drink Company Processes Direct Materials Up to the Splitoff

question 76

Multiple Choice

Cola 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 liters (with 20% shrinkage)
$\begin{array}{lll}\text { Production: } & \text { A } & 1,500 \text { liters } \\& \text { B } & 500 \text { liters } \\\text { Sales: } & \text { A } & \$ 15.00 \text { per liter } \\& \text { B } & \$ 10.00 \text { per liter }\\\end{array}$ The cost of purchasing 2,500 liters of direct materials and processing it up to the splitoff point to yield a total of 2,000 liters 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 liters of Product Z5 for an additional processing cost of $150.Product Z5 is sold for $25.00 per liter.There was no beginning inventory and ending inventory was 125 liters.
Product B may be processed further to yield 375 liters of Product W3 for an additional processing cost of $275.Product W3 is sold for $30.00 per liter.There was no beginning inventory and ending inventory was 25 liters.
What is Product Z5's estimated net realizable value at the splitoff point?

• A) $11,100
• B) $22,350
• C) $34,225
• D) $34,375

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Definitions:

Ventricular Hydrocephalus

Ventricular hydrocephalus is a condition characterized by excessive accumulation of cerebrospinal fluid in the ventricles of the brain, leading to increased pressure and potential damage to brain tissues.

Blockage of CSF

An obstruction in the flow of cerebrospinal fluid (CSF), which can lead to conditions like hydrocephalus, influencing brain pressure.

Thalamus

A brain structure that acts as a relay center, processing and transmitting sensory and motor signals to the cerebral cortex.

Third Ventricle

A median cleft between the two halves of the brain that is filled with cerebrospinal fluid.