Refer to the data given in Exercise 1720. Breakfasttime Cereal Company has an opportunity to process its Crummies further into a mulch for ornamental shrubs.

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.

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