Author Question: The Green Company processes unprocessed goat milk up to the split-off point where two products, ... (Read 71 times)

vicotolentino · **on:** Mar 6, 2021

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:

105,000 gallons (after shrinkage)

Production:

Condensed goat milk

45,500 gallons

Skim goat milk

59,500 gallons

Sales:

Condensed goat milk

$4.50 per gallon

Skim goat milk

$4.00 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 105,000 gallons of saleable product was $191,480. There were no inventory balances of either product. Condensed goat milk may be processed further to yield 45,000 gallons (the remainder is shrinkage) of a medicinal milk product, Xyla, for an additional processing cost of $5 per usable gallon. Xyla can be sold for $20 per gallon.

Skim goat milk can be processed further to yield 58,200 gallons of skim goat ice cream, for an additional processing cost per usable gallon of $5. The product can be sold for $12 per gallon.
There are no beginning and ending inventory balances.

Using the sales value at split-off method, what is the gross-margin percentage for skim goat milk at the split-off point? (Round intermediary percentages to the nearest hundredth.)
◦ 46.25%
◦ 50.00%
◦ 56.75%
◦ 53.75%

lcapri7 · **Reply #1 on:** Mar 6, 2021

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