The Green Company Processes Unprocessed Goat Milk Up to the Split-Off

question 61

Multiple Choice

The Green Company processes unprocessed goat milk up to the split-off 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 of unprocessed goat milk and processing it up to the split-off point to yield a total of 100,500 gallons of saleable product was $191,480.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 $6 per usable gallon.Xyla can be sold for $21 per gallon.
Skim goat milk can be processed further to yield 56,700 gallons of skim goat ice cream,for an additional processing cost per usable gallon of $6.The product can be sold for $14 per gallon.
There are no beginning and ending inventory balances.
What is the estimated net realizable value of Xyla at the split-off point?

• A)$453,600
• B)$464,000
• C)$630,000
• D)$637,500

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