Cola Drink Company Processes Direct Materials Up to the Split-Off

question 123

Multiple Choice

Cola Drink Company processes direct materials up to the split-off point where two products,A and B,are obtained.The following information was collected for the month of July:



The cost of purchasing 3500 liters of direct materials and processing it up to the split-off point to yield a total of 2975 liters of good products was $7000.There were no inventory balances of A and B.
Product A may be processed further to yield 2000 liters of Product Z5 for an additional processing cost of $160.Product Z5 is sold for $60.00 per liter.There was no beginning inventory and ending inventory was 125 liters.
Product B may be processed further to yield 800 liters of Product W3 for an additional processing cost of $290.Product W3 is sold for $65 per liter.There was no beginning inventory and ending inventory was 25 liters.
What is Product Z5's estimated net realizable value at the split-off point?

• A)$51,840
• B)$83,840
• C)$119,840
• D)$120,000

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Definitions:

Vertical Loading

The process of enriching a job by adding more decision-making authority and responsibilities to its tasks, aimed at increasing employee motivation and job satisfaction.

Maslow's Hierarchy

A theory in psychology proposing that human needs form a five-tier model of hierarchy, from basic physiological needs to self-actualization.

Job Enrichment

Enhancing a job's meaningfulness and engagement through redesigning tasks to increase responsibility and autonomy.

Horizontal Loading

The process of increasing the variety of tasks and responsibilities of an employee at the same level of the organization, without necessarily increasing their authority or compensation.