Cola Drink Company processes direct materials up to the splitoff point where two
ID: 2458368 • Letter: C
Question
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.
10) 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
Answer the following questions using the information below:
Globe Inc. is a distributor of DVDs. DVD Mart is a local retail outlet which sells blank and recorded DVDs. DVD Mart purchases tapes from Globe at $25.00 per DVD; DVDs are shipped in packages of 60. Globe pays all incoming freight, and DVD Mart does not inspect the DVDs due to Globe's reputation for high quality. Annual demand is 312,000 DVDs at a rate of 6,000 DVDs per week. DVD Mart earns 15% on its cash investments. The purchase-order lead time is one week. The following cost data are available:
Relevant ordering costs per purchase order $114.50
Carrying costs per package per year:
Relevant insurance, materials handling,
breakage, etc., per year $ 4.50
11) What is the economic order quantity?
A) 64.08 packages
B) 21.04 packages
C) 37.50 packages
D) 72.03 packages
12) What are the annual relevant ordering costs?
A) $9,057
B) $7,157
C) $8,266
D) $7,121
13) What are the annual relevant carrying costs?
A) $7,122
B) $8,265
C) $9,057
D) $7,157
14) What are the relevant total costs?
A) $14,279
B) $18,114
C) $16,531
D) $14,278
15) How many deliveries will be made during each time period?
A) 72.19 deliveries
B) 60.11 deliveries
C) 89.23 deliveries
D) 52.18 deliveries
Explanation / Answer
Part 1
What is Product Z5's estimated net realizable value at the splitoff point
1375*25 - 150 =
Part 2
11) What is the economic order quantity?
What are the annual relevant ordering costs?
What is Product Z5's estimated net realizable value at the splitoff point
1375*25 - 150 =
Part 2
11) What is the economic order quantity?