The Green Company processes unprocessed goat milk up to the split- off point where two products, condensed goat milk and skim goat milk Pesult. The folOWIng information was collected for the month of October: Direct materials processed: 99,000 gallons (after shrinkage) Condensed goat milk 43,500 gallons 55,500 gallons $3.75 per gallon $2.75 per gallon Production: Skim goat milk Condensed goat milk Sales: Skim goat milk The costs of purchasing the of unprocessed goat milk and processing it up to the split - off point to yield a total of 99,000 gallons of saleable product was $185,480. There were no inventory balances of either product. Condensed goat milk may be processed further to yield 43,000 gallons (the remainder is shrinkage) of a medicinal milk product, Xyla, for an additional processing cost of $4 per usable gallon. Xyla can be sold for $19 per gallon. Skim goat milk can be processed further to yield 54,200 gallons of skim goat milk ice cream, for an additional processing cost per usable gallon of $4. The product can be sold for $10 per gallon. There are no beginning and ending inventory balances. How much (if any) extra income would Green earn if it produced and sold skim milk ice cream from goats rather than skim goat milk? Allocate joint processing costs based upon the relative sales value at the split - off point. (Do not round intermediary percentages.)
The Green Company processes unprocessed goat milk up to the split- off point where two products, condensed goat milk and skim goat milk Pesult. The folOWIng information was collected for the month of October: Direct materials processed: 99,000 gallons (after shrinkage) Condensed goat milk 43,500 gallons 55,500 gallons $3.75 per gallon $2.75 per gallon Production: Skim goat milk Condensed goat milk Sales: Skim goat milk The costs of purchasing the of unprocessed goat milk and processing it up to the split - off point to yield a total of 99,000 gallons of saleable product was $185,480. There were no inventory balances of either product. Condensed goat milk may be processed further to yield 43,000 gallons (the remainder is shrinkage) of a medicinal milk product, Xyla, for an additional processing cost of $4 per usable gallon. Xyla can be sold for $19 per gallon. Skim goat milk can be processed further to yield 54,200 gallons of skim goat milk ice cream, for an additional processing cost per usable gallon of $4. The product can be sold for $10 per gallon. There are no beginning and ending inventory balances. How much (if any) extra income would Green earn if it produced and sold skim milk ice cream from goats rather than skim goat milk? Allocate joint processing costs based upon the relative sales value at the split - off point. (Do not round intermediary percentages.)
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:The Green Company processes unprocessed goat milk up to the split-off 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:**
- **Total:** 99,000 gallons (after shrinkage)
**Production:**
- Condensed goat milk: 43,500 gallons
- Skim goat milk: 55,500 gallons
**Sales:**
- Condensed goat milk: $3.75 per gallon
- Skim goat milk: $2.75 per gallon
The costs of purchasing the unprocessed goat milk and processing it up to the split-off point to yield a total of 99,000 gallons of saleable product was $185,480. There were no inventory balances of either product. Condensed goat milk may be processed further to yield 43,000 gallons (the remainder is shrinkage) of a medicinal milk product, Xyla, for an additional processing cost of $4 per usable gallon. Xyla can be sold for $19 per gallon.
Skim goat milk can be processed further to yield 54,200 gallons of skim goat milk ice cream for an additional processing cost per usable gallon of $4. The product can be sold for $10 per gallon. There are no beginning and ending inventory balances.
**Question:**
How much (if any) extra income would Green earn if it produced and sold skim milk ice cream from goats rather than skim goat milk? Allocate joint processing costs based upon the relative sales value at the split-off point. (Do not round intermediary percentages.)
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