The Alfarm Corporation processes raw milk up to the split-off 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:

The cost of purchasing 820,000 gallons of direct materials and processing it up to the split-off point to yield a total of 797,500 gallons of good product was $2,350,000.What are the physical-volume proportions to allocate joint costs for cream and liquid skim,respectively?
A)54.02% and 45.98%
B)55.55% and 44.45%
C)50.00% and 50.00%
D)53.17% and 46.83%

Question

The Alfarm Corporation processes raw milk up to the split-off 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:

The cost of purchasing 820,000 gallons of direct materials and processing it up to the split-off point to yield a total of 797,500 gallons of good product was $2,350,000.What are the physical-volume proportions to allocate joint costs for cream and liquid skim,respectively?
A)54.02% and 45.98% 
B)55.55% and 44.45% 
C)50.00% and 50.00% 
D)53.17% and 46.83%

Quizplus · Accepted Answer

Cream: 443,000 / 797,500 = 55.55%
Liquid skim: 354,500 / 797,500 = 44.45%

The Alfarm Corporation Processes Raw Milk Up to the Split-Off