The Alfarm Corporation processes raw milk up to the splitoff point where two products, cream and liquid skim, are produced and sold. There was no beginning inventory. The following material was collected for the month of February: Direct materials processed: Production: 750,000 gallons (727,500 gallons of good product) Cream 442,500 gallons Liquid skim 285,000 gallons 421,500 at $110 per gallon Liquid skim 273,000 at $100 per gallon Sales: Cream The cost of purchasing 750,000 gallons of direct materials and processing it up to the splitoff point to yield a total of 727,500 gallons of good product was $2,280,000. 1. What is the sales value at splitoff point proportions to allocate joint costs for cream and liquid skim, respectively? A. 59% and 41% B. 61% and 39% C. 50% and 50% D. 63% and 37%

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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The Alfarm Corporation processes raw milk up to the splitoff point where two products,
cream and liquid skim, are produced and sold. There was no beginning inventory. The
following material was collected for the month of February:
Direct materials processed:
750,000 gallons (727,500 gallons of good product)
442,500 gallons
Liquid skim 285,000 gallons
421,500 at $110 per gallon
Liquid skim 273,000 at $100 per gallon
Production:
Cream
Sales:
Cream
The cost of purchasing 750,000 gallons of direct materials and processing it up to the splitoff
point to yield a total of 727,500 gallons of good product was $2,280,000.
1. What is the sales value at splitoff point proportions to allocate joint costs for cream and
liquid skim, respectively?
A. 59% and 41%
B. 61% and 39%
C. 50% and 50%
D. 63% and 37%
Transcribed Image Text:The Alfarm Corporation processes raw milk up to the splitoff point where two products, cream and liquid skim, are produced and sold. There was no beginning inventory. The following material was collected for the month of February: Direct materials processed: 750,000 gallons (727,500 gallons of good product) 442,500 gallons Liquid skim 285,000 gallons 421,500 at $110 per gallon Liquid skim 273,000 at $100 per gallon Production: Cream Sales: Cream The cost of purchasing 750,000 gallons of direct materials and processing it up to the splitoff point to yield a total of 727,500 gallons of good product was $2,280,000. 1. What is the sales value at splitoff point proportions to allocate joint costs for cream and liquid skim, respectively? A. 59% and 41% B. 61% and 39% C. 50% and 50% D. 63% and 37%
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