In: Accounting
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 Produced |
Sales Value at Split-Off | Final Sales Value |
Additional Cost |
|||||||||||||
Sea Tea | 9,000 | $ | 60,000 | $ | 90,000 | $ | 35,000 | ||||||||||
Sea Paste | 3,700 | 88,100 | 160,000 | 50,000 | |||||||||||||
Sea Powder | 2,000 | 70,000 | 85,000 | 14,000 | |||||||||||||
Required:
A. What is the selling price per pound of Sea Paste at the split-off point at which the company is indifferent?