The Brital Company Processes Unprocessed Milk to Produce Two Products,Butter

question 42

Multiple Choice

The Brital Company processes unprocessed milk to produce two products,Butter Cream and Condensed Milk.The following information was collected for the month of June:


The costs of purchasing the of unprocessed milk and processing it up to the split-off point to yield a total of 28,000 gallons of saleable product was $113,100.
The company uses constant gross-margin percentage NRV method to allocate the joint costs of production.If separable costs of Butter Cream was $17,500 and constant gross margin was 20%,what would have been the allocated joint costs of Condensed Milk?

• A)$20,900
• B)$34,900
• C)$92,200
• D)$87,200

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Definitions:

Variable Cost

Expenses that undergo alteration in response to the volume of production executed.

Office Rent

The cost associated with leasing a space for business operations or administrative work.

Financial Break-even Point

The Financial Break-even Point is the level of revenue at which a company's total costs and total revenues are exactly equal, indicating no net profit or loss.

Net Present Value

A financial analysis method used to determine the overall value of a projected investment or project by calculating the present value of expected future cash flows.