Wexpro, Inc., produces several products from processing 1 ton of clypton, a rare

Question

Wexpro, Inc., produces several products from processing 1 ton of clypton, a rare mineral. Material and processing costs total $53,000 per ton, one-fourth of which is allocated to product X15. Seven thousand units of product X15 are produced from each ton of clypton. The units can either be sold at the split-off point for $16 each, or processed further at a total cost of $8,600 and then sold for $21 each.

Required:

1. What is the financial advantage (disadvantage) of further processing product X15?

2. Should product X15 be processed further or sold at the split-off point?

Ewercke 1213(Smia5pt Wexprn, Inc preduoes several products fron processing 1ton of clypton,a rae min Nateial and proceasing costs bots $52 000

Explanation / Answer

1 Incremental revenue 35000 =7000*(21-16) Additional processing costs 8600 Financial advantage 26400 2 Product X15 should be processed further

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