Rooney Chicken Corporation processes and packages chicken for grocery stores. It purchases chickens from farmers and processes them into two different products: chicken drumsticks and chicken steak. From a standard batch of 16,000 pounds of raw chicken that costs $8,950, the company produces two parts: 3,000 pounds of drumsticks and 4,800 pounds of breast for a processing cost of $4,085. The chicken breast is further processed into 4,000 pounds of steak for a processing cost of $2,700. The market price of drumsticks per pound is $1.50 and the market price per pound of chicken steak is $4.70. If Rooney decided to sell chicken breast instead of chicken steak, the price per pound would be $2.50.

1. b-1. Reallocate the joint cost to the joint products, drumsticks and breasts, using relative market values as the allocation base.

2. b-2. Calculate the gross profit for each product.

3. c-1. Should Martin further process chicken breasts into chicken steak? (Use the assumption made in requirement b-1).

4. c-2. How would the profit be affected by your answer in c-1?