Sell or process further) Smith Textiles harvests and processes cotton in a joint process that yields two joint products: fabric and yarn. May’s joint cost is $40,000, and the sales values at split-off are $120,000 for fabric and $100,000 for yarn. If the products are processed beyond split-off, the final sales value will be $180,000 for fabric and $140,000 for yarn. Additional costs of processing are expected to be $40,000 for fabric and $34,000 for yarn.

a. Should the products be processed further? Show computations.

b. Were any revenues and/or costs irrelevant to the decision? If so, what were they and why were they irrelevant? LO1.