Kelp Company produces three joint products from seaweed. At the split-off point, three basic products emerge: Sea Tea, Sea Paste, and Sea Powder. Each of these products can either be sold at the split-off point or be processed further. If they are processed further, the resulting products can be sold as delicacies to health food stores. Cost and revenue information is as follows:
|
Sales Value and Additional
Costs If Processed Further |
|
|
| Product |
Pounds
Produced |
Sales Value at Split-Off |
Final Sales
Value |
Additional
Cost |
| Sea Tea |
9,000 |
$ 60,000 |
$ 90,000 |
$ 35,000 |
| Sea Paste |
4,600 |
77,500 |
160,000 |
50,000 |
| Sea Powder |
2,000 |
70,000 |
85,000 |
14,000 |
| a-1. |
Compute the incremental benefit (cost) of further processing to these products. (Negative amounts should be shown with a minus sign.)
| a-2. |
Which products should Kelp process beyond the split-off point? |
|
|
|
|
Sea tea and sea powder |
|
Sea paste and sea powder |
|
Sea tea and sea paste |
| b. |
At what price per pound would it be advantageous for Kelp Company to sell Sea Paste at the split-off point rather than process it further? (Round your intermediate calculations and final answer to 2 decimal places.)
|
Minimut price per pound
|
|