Problem:

Anderson Compounds produces two industrial chemical compounds, Gorp and Gumm, from the same process, which last year, cost $240,000. Anderson produced 20,000 pounds of Gorp, which sells for $60 per gallon and 60,000 gallons of Gumm, which sells for $30 per gallon. After the split-off point, Gorp required additional processing costing $300,000 to make it salable. Using the adjusted sales method,

Required:

Question: What is the completed cost of Gorp?

• $300,000
• $380,000
• $520,000
• $540,000

Note: Be sure to show how you arrived at your answer.