Kelp Company produces three joint products from seaweed. At the split-off point,
ID: 2351125 • Letter: K
Question
Kelp Company produces threejoint productsfrom 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:
Compute the Incremental benefit (cost) of further processing to these products.(Negative amounts should be indicated by a minus sign. Omit the "$" sign in your response.)
Which products should Kelp process beyond the split-off point?
At what price per pound would it be advantageous for Kelp Company to sell Sea Paste at the split-off point rather than process it further?(Round your intermediate calculations and finalanswer to 2 decimal places. Omit the "$" sign in your response.)
Kelp Company produces threejoint productsfrom 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:
Explanation / Answer
a-1 Sea Tea: (90000 – 35000) = $55000 vs Sales value at split off $60000 Incremental Cost = 60000 – 55000 = $5000 Sea Paste: (160000 – 50000) = $110000 vs Sales value at split off $86400 Incremental benefit = 110000 – 86400 = $23600 Sea Powder: (85000 – 14000) = $71000 vs Sales value at split off $70000 Incremental benefit = 71000 – 70000 = $1000 a-2 Kelp should process products with net incremental benefit: Sea Paste and Sea Powder a-3 In order for Kelp Company to sell Sea Paste at the split-off point, the total revenue must be at least greater than the total net benefit to process further, which is $110000 Thus, price per pound = 110000/4000 = $27.50 Hope this helps!
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.