13) Answer the questions a to c using the information below:

The Gows Company processes unprocessed goat milk up to the splitoff 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: 125,000 gallons (shrinkage was 20%)

Production: condensed goat milk 40,000 gallons

skim goat milk 60,000 gallons

Sales: condensed goat milk $3.00 per gallon

skim goat milk $2.50 per gallon

The costs of purchasing the 125,000 gallons of unprocessed goat milk and processing it up to the splitoff point to yield a total of 100,000 gallons of salable product was $90,000. There were no inventory balances of either product.

Condensed goat milk may be processed further to yield 30,000 gallons (the remainder is shrinkage) of a medicinal milk product, Xyla, for an additional processing cost $90,000. Xyla can be sold for $10 per gallon.

Skim goat milk can be processed further to yield 50,000 gallons of skim goat ice cream, for an additional processing cost of $160,000. The ice cream can be sold for $8 per gallon.

There are no beginning and ending inventory balances.

a) What is the estimated net realizable value of Xyla at the splitoff point?

A) $300,000

B) $120,000

C) $210,000

D) $420,000

b) What is the estimated net realizable value of the skim goat ice cream at the splitoff point?

A) $240,000

B) $150,000

C) $400,000

D) $550,000

c) Using estimated net realizable value, what amount of the joint costs would be allocated to Xyla and the skim goat ice cream?

A) $40,000 and $50,000

B) $42,000 and $48,000

C) $130,000 and $210,000

D) $90,000 and $160,000