Question
Breakfasttime Cereal Company manufactures two breakfast cereals in a joint process. Cost and quantity information is as follows: Quantity at Sales Price Joint Cost Cereal
Breakfasttime Cereal Company manufactures two breakfast cereals in a joint process. Cost and quantity information is as follows: Quantity at Sales Price Joint Cost Cereal Split-Off Point per Kilogram $ 109,000 Yummies 13,900 kilograms $ 7.90 Crummies 9,900 kilograms 9.40 Breakfasttime Cereal Company has an opportunity to process its Crummies further into a mulch for ornamental shrubs. The additional processing operation costs $3.40 per kilogram, and the mulch will sell for $20.00 per kilogram.
Required: 1-a. Compute the net incremental revenue per kilogram if management decide to process Crummies into the mulch.
1-b. Should Breakfasttimes management decide to process Crummies into the mulch?
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