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 FurtherProductPounds

ProducedSales Value at Split-OffFinal Sales

ValueAdditional

CostSea Tea9,000$60,000$90,000$35,000Sea Paste3,20084,000160,00050,000Sea Powder2,00070,00085,00014,000

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?