Castille industries produces chemicals for the swimming pool industry. in one joint process, 10,000 liters of GSX are processed into 7000 liters of xenolite and 3000 liters of banolide. The cost of the joint process including the GSX is $40,000. Castille allocates $28,000of the jointcost to the xenolite and $12,000 of the cost to the banolide. the 3000 liters of banolide can be sold at the split-off point for $5000, or they can be processed further into a product called kitocide. the sales value of 3000 liters of kitrocide is $20,000, and the additional processing cost is $16,000.

Required:

Castille's managing director has asked your consulting firm to make a recommendation as to whether the banolide should be sold at the split-off point or processed further. draft a letter providing an analysis and a recommendation.

while recommending show the necessary calculation to give clear information.