HK Ltd produces high-end cleaning chemicals. In the joint part of its production process, the joint inputs are first heated and then filtrated to lead to two varieties of cleaning liquid: CI, which is used in health care for cleaning hospital equipment, and CF, which is used to clean machines used in food and beverage production. Each product requires some additional processing after the split-off point to get to the final product which is sold to customers The production process runs in batches of 500 litres, which is the physical size of the main production tank. One batch results in 125 litres of Cl and 375 litres of CF. The joint costs per batch are 150,000. After the split off point, specific costs for Cl are 75 per litre, and for CF 50 per litre. Currently, Cl sells for 525 per litre, and CF for 350 per litre. Allocate the joint costs to Cl and CF based on physical measures (litres). What is the operating profit for each product? Allocale the joint costs to Cl and CF based on the net realizable value (NRV). What is the operating profit for each product? Recently, the R&D department of HK Ltd has developed an additional processing step for Cl which leads to a higher quality cleaning product, CO. As a result, it can be used in settings with a higher hygiene requirement such as operating rooms for surgeries. The sales department of HK expects that co can be sold for 800 per litre. The extra specific costs to turn Clinto CO are 300, these costs are in addition to the 75 which will still be required for the processing step to produce CI. Based on financial considerations only, should HK implement the additional processing step and process CI further to create CO? Support your answer with a calculation