Question

[The following information applies to the questions displayed below.] 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 $ 98,000 Yummies 12,800 kilograms $ 6.80 Crummies 8,800 kilograms 8.30 Breakfasttime Cereal Company has an opportunity to process its Crummies further into a mulch for ornamental shrubs. The additional processing operation costs $2.30 per kilogram, and the mulch will sell for $14.50 per kilogram. 5.value: 1.33 pointsRequired information You did not receive full credit for this question in a previous attempt

.	Compute the net incremental revenue per kilogram if management decide to process Crummies into the mulch. (Round your answer to 2 decimal places.)

Answer 1

Crummies will sell for = $8.30 per kilogram

The additional processing operation costs are $2.30 per kilogram, and the mulch will sell for $14.50 per kilogram.

Increase in revenue if Crummies are converted into mulch = Selling price per kilogram of mulch - Selling price per kilogram of Crummies

= 14.50 - 8.30

= $6.20

Net incremental revenue per kilogram if management decide to process Crummies into the mulch = Increase in revenue if Crummies are converted into mulch - Additional processing operation costs

= 6.20 - 2.30

= $3.90

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