A petrochemical factory produces two products, L and M, as a
result of a joint process. Both products are sold to manufacturers as ingredients
for assorted chemical products.
Product L sells at split-off for $0.25 per litre; M, for $0.30 per litre. Data for
April follow:

Suppose that in April the 2,500,000 litres of M could have been processed
further into Super M at an additional cost of $225,000. The Super M output
would be sold for $0.38 per litre. Product L would be sold at split-off in any
event.
Should M have been processed further in April and sold as Super M? Show
computations.

Transcribed Image Text:

Joint processing cost $1,600,000 Litres produced and sold: L 4,000,000 M 2,500,000