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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. Product Sea Tea Sea Paste Sea Powder Pounds Produced 9,000 5,700 2,000 Sales Value and Additional Costs If Processed Further Sales Value at Final Sales Split-Off Value $ 60,000 $ 90,000 87,300 160,000 70,000 85,000 Additional Cost $ 35,000 50,000 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. What is the selling price per pound of Sea Paste at the split-off point at which the company is indifferent? Complete this question by entering your answers in the tabs below. Req A1 Req A2 Req B Compute the incremental benefit (cost) of further processing to these products. (Negative amounts should be shown with a minus sign.) Sea Tea Sea Paste Sea Powder Incremental benefit (cost) Complete this question by entering your answers in the tabs below. Req A1 Reg A2 Req B Which products should Kelp process beyond the split-off point? Kelp should process split-off point.
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