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Coco Co., owns a large processing line which segregates coconut into its components upon contract with breaker of the machine. Presently, it sells the coconut

Coco Co., owns a large processing line which segregates coconut into its components upon contract with breaker of the machine. Presently, it sells the coconut meat, juice, shell and husk to various manufacturers. A feasibility study is being made to process its components into buko pies for the meat, buko juice for the juice, flower pots for the shells and fuel briquettes for the husk. At the segregation point. you gathered the following data per unit:

Meat Juice Shell Husk
Selling price P4.00 P2.00 P1.00 P1.00
Allocated joint cost 0.13 0.06 0.03 0.03
Profit or loss P3.87 P1.94 P0.97 P0.97

The study shows that after further application of additional manufacturing process, the following is projected:

Meat Juice Shell Husk
Selling price P12.00 P4.00 P2.00 P2.00
Additional processing cost 3.80 2.90 1.95 1.95

Fixed cost of the plant amounts to P500,000. Interest rate is 12%. Which product should go through the additional manufacturing process?

Please show computations and explain.

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