Management Accounting

(b) Florist Sdn Bhd is considering a proposal to process product W further in Process 2 to create product W1. Product W1 is priced at RM15 per unit. Process 2 has enough spare capacity to complete this work. The additional processing in Process 2 would cost an additional RM12,000. The following information is critical for the company to consider when deciding whether to convert product W to W1: Joint product costs RM200,000 Sales value at split-off point: Product X (6,000 units at RM10 per unit) - RM60,000 Product W (6,000 units at RM12 per unit) RM72,000 Required: Justify whether product W can be converted into product W1 solely on the basis of financial considerations. (9 marks) [Total: 25 Marks]