Question :
Answer the following questions using the information below:
The Gows Company : 1217015
Answer the following questions using the information below:
The Gows 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:
Direct Materials processed:130,000 gallons (shrinkage was 10%)
Production:condensed goat milk52,200 gallons
skim goat milk64,800 gallons
Sales:condensed goat milk$3.50 per gallon
skim goat milk$2.50 per gallon
The costs of purchasing the 130,000 gallons of unprocessed goat milk and processing it up to the splitoff point to yield a total of 117,000 gallons of salable product was $144,480. There were no inventory balances of either product.
Condensed goat milk may be processed further to yield 39,000 gallons (the remainder is shrinkage) of a medicinal milk product, Xyla, for an additional processing cost of $3 per usable gallon. Xyla can be sold for $18 per gallon.
Skim goat milk can be processed further to yield 56,200 gallons of skim goat ice cream, for an additional processing cost per usable gallon of $2.50. The product can be sold for $9 per gallon.
There are no beginning and ending inventory balances.
21) What is the estimated net realizable value of Xyla at the splitoff point?
A) $365,300
B) $505,800
C) $585,000
D) $702,000
22) What is the estimated net realizable value of the skim goat ice cream at the splitoff point?
A) $365,300
B) $505,800
C) $220,400
D) $170,900
23) Using estimated net realizable value, what amount of the $72,240 of joint costs would be allocated Xyla and the skim goat ice cream?
A) $83,942 and $60,538
B) $88,942 and $55,538
C) $65,592 and $78,888
D) $144,480 and $72,140
24) Using the sales value at splitoff method, what is the gross-margin percentage for condensed goat milk at the splitoff point?
A) 21.1%
B) 55.1%
C) 58.1%
D) 38.2%
25) Using the sales value at splitoff method, what is the gross-margin percentage for skim goat milk at the splitoff point?
A) 21.1%
B) 55.1%
C) 58.1%
D) 38.2%
26) How much (if any) extra income would Morton earn if it produced and sold all of the Xyla from the condensed goat milk? Allocate joint processing costs based upon relative sales value on the splitoff. (Extra income means income in excess of what Morton would have earned from selling condensed goat milk.)
A) $106,126
B) $508,426
C) $402,300
D) $193,574
27) How much (if any) extra income would Morton earn if it produced and sold skim milk ice cream from goats rather than goat skim milk? Allocate joint processing costs based upon the relative sales value at the splitoff point.
A) $94,094
B) $234,594
C) $203,300
D) $140,500
28) Chem Manufacturing Company processes direct materials up to the splitoff point where two products (X and Y) are obtained and sold. The following information was collected for the month of November:
Direct materials processed:10,000 gallons (10,000 gallons yield 9,500 gallons of good product and 500 gallons of shrinkage)
Production:X5,000 gallons
Y4,500 gallons
Sales:X4,750 at $150 per gallon
Y4,000 at $100 per gallon
The cost of purchasing 10,000 gallons of direct materials and processing it up to the splitoff point to yield a total of 9,500 gallons of good products was $975,000.
The beginning inventories totaled 50 gallons for X and 25 gallons for Y. Ending inventory amounts reflected 300 gallons of Product X and 525 gallons of Product Y. October costs per unit were the same as November.
Using the physical-volume method, what is Product X’s approximate gross-margin percentage?
A) 32%
B) 33%
C) 35%
D) 38%
29) Beverage 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)
Production:A1,500 liters
B500 liters
Sales:A$15.00 per liter
B$10.00 per liter
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.
If Product Z5 and Product W3 are produced, what are the expected sales values of production, respectively?
A) $11,250 and $34,375
B) $22,500 and $ 5,000
C) $31,250 and $10,500
D) $34,375 and $11,250
30) 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)
Production:A1,500 liters
B500 liters
Sales:A$15.00 per liter
B$10.00 per liter
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
