E21.-LO.3 (Sell or process further) Winngvia Mills processes cotton in a joint process that yields two joint products: fabric and yarn. May's joint cost is $120,000, and the sales values at split-off are $360,000 for fabric and $300,000 for yarn. If the products are processed beyond split-off, the final sales value will be $540,000 for fabric and $420,000 for yarn. If the products are processed beyond split-off the final sales value will be $540,000 for fabric and $420,000 for yarn. Additional costs of processing are expected to be $120,000 for fabric and $102,000 for yarn. a. Should the products be processed further? Show computations. Final Revenues Revenues at split-off Incremental revenues Incremental Costs Net benefit (cost) of further processing Fabric $540,000 $360,000 $180,000 $120,000 $60,000 Yarn $420,000 $300,000 $120,000 $102,000 $18,000 Yes, product should be processed further as it add additional profit of $78,000 ($60,000 + $18,000) in total. b. Were any revenues and/or costs irrelevant to the decision? If so, what were they and why were they irrelevant