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Annie's Farm grows, picks, and processes apples to produce two different types of products: applesauce and apple juice. Applesauce can be sold at the split-off
Annie's Farm grows, picks, and processes apples to produce two different types of products: applesauce and apple juice. Applesauce can be sold at the split-off point for $5 per unit, or it can be processed further into apple juice for an additional cost of $3 per unit. Apple juice can be sold for $10 per unit. The joint production costs are $500.00. Should applesauce be processed further or sold at the split-off point? No, applesauce should be sold at split-off point because the incremental profit would be $5. No, applesauce should be sold at split-off point because the incremental profit would be $2. Yes, applesauce should be processed further because the incremental profit would be $2. Yes, applesauce should be processed further because the incremental profit would be $5
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