Gondola Ltd produces four joint products — A, B, C and D — at a total cost of \($325\) 000. The company can sell the products immediately at the split-off point for \($100\) 000, \($40\) 000, \($90\) 000 and \($85\) 000 respectively. Alternatively, the products also can be processed further and sold as shown below.

Assume that all costs after the split-off point can be avoided for any product that is not processed beyond the split-off point.

Required

(a) Which products should be processed further and which should be sold at the split-off point? Show calculations to justify the decisions

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Product A Further processing costs $ 188 000 400 000 Sales (excluding GST) $400 000 480 000 B C 430 000 580 000 D 100 000 280 000