Question 4 (Total: 26 marks)

Cows Creamery Company makes two products from a common input. Joint processing costs up to the split-off point total $42,000 a year. The company allocates these costs to the joint products on the basis of their total sales values at the split-off point. Each product may be sold at the split-off point or processed further. Data concerning these products appear below:

	Gooey Mooey	Wowie Cowie	Total
Allocated Joint processing costs	$22,000	$19,600	$41,600
Sales value at split-off point	$32,000	$28,000	$60,000
Costs of further processing	$11,600	$25,300	$36,900
Sales value after further processing	$40,800	$54,200	$95,000

Required:

1. What is the net monetary advantage (disadvantage) of processing Gooey Mooey beyond the split-off point?
2. What is the net monetary advantage (disadvantage) of processing Wowie Cowie beyond the split-off point?
3. What is the minimum amount the company should accept for Gooey Mooey if it is to be sold at the split-off point?
4. What is the minimum amount the company should accept for Wowie Cowie if it is to be sold at the split-off point?