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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
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 Pounds Produced Product Sales Value at Split-Off Final Sales Value Additional Cost Sea Tea Sea Paste 9,000 4.000 2,000 $60,000 80,000 70,000 $ 90,000 160,000 85,000 $35.000 50,000 14,000 Sea Powder Instructions a. 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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