Question
!!! I only need the answer for part A1 for the product sea tea . the answer is NOT 5000 !!! Kelp Company produces three
!!! I only need the answer for part A1 for the product sea tea. the answer is NOT 5000 !!!
Kelp Company produces three joint products from seaweed. At the split-off point, three basic products emerge: Sea Tea, Sea Paste, and Sea Powder. Each of these products can either be sold at the split-off point or be processed further. If they are processed further, the resulting products can be sold as delicacies to health food stores. Cost and revenue information is as follows.
Sales Value and Additional Costs If Processed Further | |||||||||||||||||
Product | Pounds Produced | Sales Value at Split-Off | Final Sales Value | Additional Cost | |||||||||||||
Sea Tea | 9,000 | $ | 60,000 | $ | 90,000 | $ | 35,000 | ||||||||||
Sea Paste | 6,500 | 73,400 | 160,000 | 50,000 | |||||||||||||
Sea Powder | 2,000 | 70,000 | 85,000 | 14,000 | |||||||||||||
Required:
a-1. Compute the incremental benefit (cost) of further processing to these products.
a-2. Which products should Kelp process beyond the split-off point?
b. At what price per pound would it be advantageous for Kelp Company to sell Sea Paste at the split-off point rather than process it further?
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