Kelp Company produces 3 joint products from seaweed. At the split-off point, 3 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 Vaule Additional Cost Sea Tea 9,000 $60,000 $90,000 $35,000 Sea Paste 4,000 80,000 160,000 50,000 Sea Powder 2,000 70,000 85,000 14,000
INSTRUCTIONS:
A. Which products should Kelp process beyond the split off point?
B. At what price per pound would it be advantageous for Kelp Co to sell Sea Paste as the split-off point rather than process if further?