(Solved) Cola Drink Company processes direct materials up to the splitoff point where two products, A and B,

Cola Drink Company processes direct materials up to the splitoff point where two products, A and B, are obtained. The following information was collected for the month of July:

Direct materials processed:   2,500 liters (with 20% shrinkage)

Production:   A   1,500 liters
   B   500 liters

Sales:   A   $15.00 per liter
   B   $10.00 per liter

The cost of purchasing 2,500 liters of direct materials and processing it up to the splitoff point to yield a total of 2,000 liters of good products was $4,500. There were no inventory balances of A and B.

Product A may be processed further to yield 1,375 liters of Product Z5 for an additional processing cost of $150. Product Z5 is sold for $25.00 per liter. There was no beginning inventory and ending inventory was 125 liters.

Product B may be processed further to yield 375 liters of Product W3 for an additional processing cost of $275. Product W3 is sold for $30.00 per liter. There was no beginning inventory and ending inventory was 25 liters.

What is Product Z5's estimated net realizable value at the splitoff point?
A) $11,100
B) $22,350
C) $34,225
D) $34,375

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Cola Drink Company processes direct materials up to the splitoff point where two products, A and B,

Cost Accounting

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