Annie's Homemade makes the brownies it adds to vanilla fudge brownie ice cream. The company is deciding whether it should sell brownies as a stand-alone product or always cut them into smaller pieces and add them to the vanilla fudge brownie ice cream. The cost to make 12 three-ounce brownies is $4.00. Each three-ounce brownie could be sold for $2.00. It costs $0.20 to cut a three-ounce brownie into pieces and add it to ice cream. A six-ounce serving of vanilla fudge brownie uses one ounce of brownies plus $1.10 of other ingredients and labor while selling for $5.00.

Required:

1. What total revenue does Annie's earn when it adds a three-ounce brownie to servings of vanilla fudge brownie ice cream?
2. What is the sales value of a three-ounce brownie at the split-off point?
3. What is the incremental revenue from further processing a three-ounce brownie?
4. What is Annie's total cost of further processing if it chooses to include each three-ounce brownie in servings of vanilla fudge brownie ice cream?
5. What is the financial advantage (disadvantage) of further processing a three-ounce brownie into servings of vanilla fudge brownie ice cream?