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 5,200 74,300 160,000 50,000 Sea Powder 2,000 70,000 85,000 14,000 Instructions a 1 Compute the incremental benefit (cost) of further processing to these products (Negative amounts should be shown with a minus sign ) a 2 Which products should Kelp process beyond the split off point Sea paste and sea powder Sea tea and sea powder Sea tea and sea paste 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 (Round your intermediate calculations and final answer to 2 decimal places )

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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

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	5,200	74,300	160,000	50,000
Sea Powder	2,000	70,000	85,000	14,000

Instructions

a-1.

Compute the incremental benefit (cost) of further processing to these products. (Negative amounts should be shown with a minus sign.)

a-2.

Which products should Kelp process beyond the split-off point?

	Sea paste and sea powder
	Sea tea and sea powder
	Sea tea and sea paste

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? (Round your intermediate calculations and final answer to 2 decimal places.)