The dairy 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 liters, 25% butter, 25% cheese and 50% cream. all products are processed further without gain or loss in volume. separable costs are butter $0.50 per liter, Cheese $2 per liter, cream $0.25 per liter. the selling prices per liter are respectively: $3.50, $6, $4.

Required

a. How much joint cost per batch should be allocated to cream, assuming that joint costs are allocated on a physical measure basis?

b. If joint costs are assigned on a net realizable value basis, how much Joint costs should be allocated to Cheese?

c. An organic grocer has offered to buy all of the cheese produced at $5.50 per liter. traditionally 90% of the cheese production is sold. how much better or worse off financially is the company from accepting this offer?