Refer to the data given in Exercise 1720. Breakfasttime Cereal Company has an opportunity to process its

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 $1.50 per kilogram, and the mulch will sell for $10.50 per kilogram.

In Exercise 17–20.

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 theYummies.

Transcribed Image Text:

Joint Cost Cereal Quantity at Split-Off Point Sales Price per Kilogram .$6.00 2,000 kilograms.... 8,000 kilograms.. Yummies $90,000