Kelp Company produces three joint products from seaweed. At the split-off point, three basic
products emerge: Sea Tea, Sea Paste, and Sea Powder.
Joint Products
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 or be processed further.
If they are processed further, the resulting products can be sold as delicacies to health food stores.
Cost and revenue information is as follows: Sales Value and Additional
Costs if Processed Further
Product Pounds Sales Value Final Sales Value Additional Cost Produced @ Split-off Sea Tea….. 9,000 $60,000 $90,000 $35,000
Sea Paste…. 4,000 $80,000 $160,000 $50,000
Sea Powder… 2,000 $70,000 $85,000 $14,000
INSTRUCTIONS
b.) At what price per pound would it be advantageous for Kelp Company to sell Sea Paste at the split
-off point rather than process it further?
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