What is the selling price per pound of Sea Paste

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Reference no: EM132644847

Question - Kelp Company produces three joint products from seaweed. At the split-off point, three basic products emerge: Sea Tea, Sea Paste, and Sea Powder. Each of these products can either be sold at the split-off point of be processed further. If they are processed further, the resulting products can be sold as delicacies to the health food stores. Cost and revenue information is as follows.

Sales Value and Additional Costs if Processed Further:

Sea tea: Pounds Produced: 9,000 Sales Value at Split-Off: $60,000 Final Sales Value: $90,000

Sea Paste: Pounds Produced: 4,900 Sales Value at Split-Off: 73,800 Final Sales Value: 160,000

Sea Power: Pounds Produced: 2,00 Sales Value at Split-Off: 70,000 Final Sales Value: 85,000

Required -

1. Compute the incremental benefit (cost) of further processing to these products.

2. Which products should Kelp process beyond the split-off point?

3. What is the selling price per pound of Sea Paste at the split-off point at which the company is indifferent?

Reference no: EM132644847

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