1. Gomez Industries produces three products from a single operation. Product A sells for $4 per unit, Product B for $6 per unit, and product C for $10 per unit. When B is processed further, there are additional unit costs of $3, and its new selling price is $10 per unit. Each product is allocated $2 of joint costs from the initial production operation. Should Product B be processed further, or should it be sold at the end of the initial operation?

2. Sandcastles Inc.s management has recently been looking at a proposal to purchase a new brick molding machine. With the new machine, the company would not have to buy bricks. The estimated useful life of the machine is 15 years, and the purchase price, including all setup charges, is $400,000. The residual value is estimated to be $40,000. The net addition to the companys cash inflow as a result of savings from making the bricks is estimated to be $70,000 a year. Sandcastles management has decided on a minimum rate of return of 14 percent. Using the net present value method to evaluate the capital investment, determine whether the company should purchase the machine.