Question #$2$

Mediterranean Olive Co$.$ produces olive oil. It costs $$4$ per pound to process the olives into olive oil. Olive pulp is a by$-$product of the manufacturing process. They can sell the olive pulp or process it further.

Mediterranean Olive Co$.$ can chemically process the olive pulp to make pomace olive oil. They can produce $10,000$ ounces of pomace olive oil per harvest for additional processing costs of $$4,200.$ They can sell the pomace olive oil for $$1\mathrm{.}50$ per ounce.

Instead of processing the olive pulp, Mediterranean Olive Co$.$ can sell it to a local company to make fuel. The local company offered $$9,000$ for the entire batch of olive pulp left over from the manufacturing process each harvest.

The cost of processing the olive pulp into pomace oil is:

$$ A joint cost that is not relevant to the decision to process the olive pulp further

Not a joint cost but not relevant to the decision to process the olive pulp further

A joint cost that is relevant to the decision to process the olive pulp further

$$ Not a joint cost but relevant to the decision to process the olive pulp further