Question

Breakfasttime Cereal Company manufactures two breakfast cereals in a joint process. Cost and quantity information is as follows:

  

Joint Cost			Cereal	Quantity at Split-Off Point			Sales Price per Kilogram
$	93,000		Yummies		12,300	kilograms	$	6.30
			Crummies		8,300	kilograms		7.80

Breakfasttime Cereal Company has an opportunity to process its Crummies further into a mulch for ornamental shrubs. The additional processing operation costs $1.80 per kilogram, and the mulch will sell for $12.00 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 calculation of relative proportions to 3 decimal places.)
	Allocation of Joint Cost Yummies Mulch

Answer 1

Net realisable value = Sales Value - Additional processing cost
	NRV	Joint costs allocated
Yummies	77,490	44,443.85
Mulch	84,660	48,556.15
Total	162,150	93,000.00

A В C 1 Net realisable value Joint costs allocated =93000* B3/B5 =93000* B4/B5 =SUM(C3:C4) NRV 2 -6.3*12300 3 Yummies (12-1.8)*8300 =SUM(B3:B4) 4 Mulch 5 Total