FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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**Beverage Drink Company Production Analysis for July**

Beverage Drink Company processes direct materials up to the split-off point where two products, A and B, are produced. Below is the information collected for the month of July:

**Direct Materials Processed:**
- Total processed: 3,000 liters
- Shrinkage: 25%

**Production:**
- Product A: 1,800 liters
- Product B: 450 liters

**Sales Price:**
- Product A: $15 per liter
- Product B: $10 per liter

**Cost Details:**
The purchasing and processing cost of 3,000 liters of direct materials to the split-off point, yielding 2,250 liters of good products, amounted to $9,500. There were no beginning or ending inventory balances for Products A and B.

**Further Processing Options:**
- **Product A:** Can be further processed to yield 1,700 liters of Product Z5.
  - Additional processing cost: $190
  - Sale price of Product Z5: $70 per liter
  - No beginning inventory; ending inventory was 125 liters.
  
- **Product B:** Can be further processed to yield 350 liters of Product W3.
  - Additional processing cost: $320
  - Sale price of Product W3: $75 per liter
  - No beginning inventory; ending inventory was 25 liters.

**Question:**
If Product Z5 and Product W3 are produced, what are the expected sales values of the production, respectively?
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Transcribed Image Text:**Beverage Drink Company Production Analysis for July** Beverage Drink Company processes direct materials up to the split-off point where two products, A and B, are produced. Below is the information collected for the month of July: **Direct Materials Processed:** - Total processed: 3,000 liters - Shrinkage: 25% **Production:** - Product A: 1,800 liters - Product B: 450 liters **Sales Price:** - Product A: $15 per liter - Product B: $10 per liter **Cost Details:** The purchasing and processing cost of 3,000 liters of direct materials to the split-off point, yielding 2,250 liters of good products, amounted to $9,500. There were no beginning or ending inventory balances for Products A and B. **Further Processing Options:** - **Product A:** Can be further processed to yield 1,700 liters of Product Z5. - Additional processing cost: $190 - Sale price of Product Z5: $70 per liter - No beginning inventory; ending inventory was 125 liters. - **Product B:** Can be further processed to yield 350 liters of Product W3. - Additional processing cost: $320 - Sale price of Product W3: $75 per liter - No beginning inventory; ending inventory was 25 liters. **Question:** If Product Z5 and Product W3 are produced, what are the expected sales values of the production, respectively?
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