Cost Accounting - Ch.17 Sell or Process Further Decisions Please kindly help ans
ID: 2425956 • Letter: C
Question
Cost Accounting - Ch.17 Sell or Process Further Decisions
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Example: Enviro-Chem Company processes a number of chemical compounds used in producing reagents for the environmental testing industry. One compound is decomposed into two chemicals: guarine and petroline. The cost of processing one batch of compound is $86,700, and the result is 3,740 gallons of guarine and 7,660 gallons of petroline. Enviro-Chem Company can sell the guarine at split-off for $17 per gallon and the petroline for $7 per gallon. Alternatively, the guarine can be processed further at a cost of $4 per gallon (of guarine) into rhydrolite. It takes 4 gallons of guarine for every gallon of rhydrolite. A gallon of rhydrolite sells for $81. If the guarine is sold at split-off, Enviro-Chem will earn sales revenue on guarine of $63,580. If the guarine is processed further into rhydrolite, Enviro-Chem will earn a net post-split-off amount of $**BLANK ASNWER**
Explanation / Answer
Total Project Approach:
60775
Enviro-Chem will earn a net post-split-off amount of $60775.
FurtherProcessed Revenue $75735 Costs 14960 Net Revenue
60775
Enviro-Chem will earn a net post-split-off amount of $60775.