Question 2. The Magic Milk Company produces three products from a joint processes using whole milk: butter, cheese, and cream. The joint costs amount to $24,000 per batch of output. Each batch totals 50,000 litres: 25% butter, 25% cheese, 50% cream . All products are processed further without gain or loss in volume. Separable costs are butter, $0.50 per litre; cheese, $2.00 per litre; cream, $0.25 per litre. The selling prices per litre are respectively: $3.50, $6.00,$4.00. Required: 1. How much joint cost per batch should be allocated to each product, assuming that joint costs are allocated on a physical measure basis? 2. If joint costs are assigned on a net realizable value basis, how much joint cost should be allocated to each product? 3. An organic grocer has offered to buy all of the cheese produced at $5.50 per litre. Traditionally 90% of the cheese production is sold. How much better or worse off financially is the company from accepting this offer