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Hommie Delicacies produces two products (Orapine and Banango) from a joint process. The joint cost of production is GH¢80,000. Five thousand units of Orapine can be sold at split-off for GH¢20 per unit or processed further at an additional cost of GH¢20,000 and sold for GH¢25 per unit. Ten thousand units of Banango can be sold at split-off for GH¢15 per unit or processed further at an additional cost of GH¢20,000 and sold for GH¢16 per unit.
Question 1: What is the difference in profit for each of the products if Hommie decides to process further Orapine and Banango instead of selling it at split-off? What advise will you give to Hommie?
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