Breakfasttime Cereal Company manufactures two breakfast cereals in a joint process. Cost and quantity information is as follows:

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.