When using the physical-volume method, what is Mr. DirtOut's approximate production cost per unit

ACCOUNTING

Multiple Choice

The Oxnard Corporation processes a liquid component up to the splitoff point where two products, Mr. DirtOut and Mr. SinkClean, are produced and sold. The following material was collected for the month of January. There was no beginning inventory.


Direct materials processed: 250,000 gallons (242,500 gallons of good product)


Production: Mr. DirtOut 147,500 gallons

Mr. SinkClean 95,000 gallons


Sales: Mr. DirtOut 140,500 at $110 per gallon

Mr. SinkClean 91,000 at $ 100 per gallon


The cost of purchasing 250,000 gallons of direct materials and processing it up to the splitoff point to yield a total of 242,500 gallons of good product was $380,000.


When using the physical-volume method, what is Mr. DirtOut's approximate production cost per unit?

a. $1.52

b. $1.54

c. $1.57

d. $1.61

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