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: | 100,500 gallons (after shrinkage) |
| Production: | Condensed goat milk | 42,500 gallons |
| Skim goat milk | 58,000 gallons |
| Sales: | Condensed goat milk | $4.00 per gallon |
| Skim goat milk | $3.50 per gallon |
The costs of purchasing the of unprocessed goat milk and processing it up to the split-off point to yield a total of 100,500 gallons of saleable product was $191,480. There were no inventory balances of either product. Condensed goat milk may be processed further to yield 42,000 gallons (the remainder is shrinkage) of a medicinal milk product, Xyla, for an additional processing cost of $6 per usable gallon. Xyla can be sold for $21 per gallon.
Skim goat milk can be processed further to yield 56,700 gallons of skim goat ice cream, for an additional processing cost per usable gallon of $6. The product can be sold for $14 per gallon.
There are no beginning and ending inventory balances.
What is the estimated net realizable value of Xyla at the split-off point?
◦ $453,600
◦ $464,000
◦ $630,000
◦ $637,500
Paul Cézanne: Green Apples, c.1873
McBurney point.
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