Cannabis World grows medical cannabis for use in oral capsules in southeast Michigan. Cannabis World is trying to determine whether it is worth it to process the oral capsules in-house, or to sell the cannabis to another firm. There are three types of cannabis being produced: Schwag, Mid-Grade, and Dank. Joint costs, which are allocated on the basis of sales revenue, are $400,000 for the whole operation, and the cost to process any individual type of capsule is $100,000. Sales prices for each type are given below:

    

Explain to Cannabis World which grades ought to be sold at the split-off point (plant), and which ought to be processed further (capsule).
 

Plant Capsule Revenue Revenue Schwag $ 75,000 $150,000 Mid-Grade $200,000 $325,000 Dank $450,000 $650,000