Sell or Process Further

Port Allen Chemical Company processes raw material D into joint products E and F. Raw material D costs $6 per liter. It costs $100 to convert 100 liters of D into 60 liters of E and 40 liters of F. Product F can be sold immediately for $6 per liter or processed further into Product G at an additional cost of $4 per liter. Product G can then be sold for $14 per liter.

Determine whether Product F should be sold or processed further into Product G.

• Calculate the net advantage (disadvantage)of further processing.
• Use a negative sign with your answer to indicate a net disadvantage (if applicable).