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Cola Drink Company processes direct materials up to the splitoff point where two products, A and...

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:        A                     1,500 liters

                        B                      500 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.

10) 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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Answer #2
Please give positive ratings so I can keep answering. It would help me a lot. Please comment if you have any query. Thanks!
Cola Drink Company Amount $
Units      1,375.00
Sell price for special order           25.00
Sale value 34,375.00
Less: Additional processing cost         150.00
Estimated net realizable value at the split off point 34,225.00
answered by: anonymous
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