Compute the net incremental revenue per kilogram

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

Joint Cost                                           Quantity at                 Sales Price            

                           Cereal                    Split-Off Point                per Kilogram

$30,000                 yummies          12,000 kilograms           $2.00
                           yummies            8,000 kilograms           2.50

Breakfasttime 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.

Question 1-a Compute the net incremental revenue per kilogram if management decide to process Crummies into the mulch.

Question 1-b. Should Breakfasttime's management decide to process Crummies into the mulch?

Reference no: EM132692357

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