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Ymmies Crummies

Price: $1.99

Refer to the data given in Exercise 17–20 . Breakfast time Cereal Company has an opportunity
to process its Crummies further into a mulch for ornamental shrubs. The additional
processing operation costs $0.50 per kilogram, and the mulch will sell for $3.50
per kilogram.

Data from E17-20
Joint CostCereal Quantity at Split Off PointSales Price Per Kilogram
$30,000Yummies 12,000 $2.00
Crummies 8,000 $2.50


1. Should Breakfast time’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 the Yummies.

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