Reference no: EM132624878

Chem Manufacturing Company processes direct materials up to the splitoff point, where two products (X and Y) are obtained and sold. The following information was collected for the month of November.

Direct materials processed:

10,000 litres (10,000 litres yield 9,500 litres of good product and 500 litres of shrinkage)

Production:

X 5,000 litres

Y 4,500 litres

Sales:

X 4,750 at $150 per litre

Y 4,000 at $100 per litre

The cost of purchasing 10,000 litres of direct materials and processing it up to the splitoff point to yield a total of 9,500 litres of good products was $975,000.

The beginning inventories totalled 50 litres for X and 25 litres for Y. Ending inventory amounts reflected 300 litres of product X and 525 litres of product Y. October costs were per unit were the same as November.

Problem 1: What is product Y's approximate joint production cost if the sales value at splitoff point method is used?