Breakfasttime Cereal Company manufactures two breakfast cereals in a joint process. Cost and quantity information is as follows:
Joint Cost Cereal Quantity at Split-Off Point Sales Price per Kilogram
$30,000 Yummies ………………… 12,000 kilograms ………………………………. $2.00
Crummies ……………….. 8,000 kilograms ………………………………. 2.50
Required: Use the physical-units method to allocate the company s joint production cost between
Yummies and Crummies.
Refer to the data given in the preceding exercise.
Required: Use the relative-sales-value method to allocate Breakfasttime Cereal Company s joint production
cost between Yummies and Crummies.
Refer to the data given in Exercise 17 20 . Breakfasttime Cereal Company has an opportunity to process its Crummies further into a mulch for ornamental shrubs. The additional processing operation costs $.50 per kilogram, and the mulch will sell for $3.50 per kilogram.
Required:
1. Should Breakfasttime s management decide to process Crummies into the mulch? Why?
2. Suppose the company does process Crummies into the mulch. Use the net-realizable-value method
to allocate the joint production cost between the mulch and the Yummies