6 Required Informatlon The following information applies to the questions displa

Question

6 Required Informatlon The following information applies to the questions displayed below. Breakfasttime Cereal Company manufactures two breakfast cereals in a joint process. Part 2 of 2 Cost and quantity Information is as follows: points Quantity at Split-Off Sales Price per Jolnt Cost Cereal Point Kilogram $8.00 $110,000 Yummies 14,000 kllograms Crummies 10,000 kilograms 9.50 Breakfasttime Cereal Company has an opportunity to process its Crummies further into a mulch for ornamental shrubs. The additional processing operation costs $3.50 per kilogram, and the mulch will sell for $20.50 per kilogram. 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. (Round your calculatlon of relatlve proportlons to 3 declmal places.) Answer is complete but not entirely correct. Allocation of Joint 44,464 102,510 Yummies Mulch

Explanation / Answer

Net realizable value of yummies = (14000*8) = 112000

Net realizable value of mulch = (20.50-9.50-3.50)*10000 = 75000

Total net realizable value = 187000

Allocation of joint cost :

Yummies = 110000*112000/187000 = 65882

Mulch = 110000*75000/187000 = 44118

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