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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: Product Sea Tea Sea Paste Sea Powder Sales Value and Additional Costs If Processed Further Sales Value at Split-Off $ 60,000 80,000 70,000 Pounds Produced 9,000 4,000 2,000 Final Sales Value Additional Cost $ 35,000 50,000 14,000 $ 90,000 160,000 85,000 Required: a-1. Compute the incremental benefit (cost) of further processing to these products. a-2. Which products should Kelp process beyond the split-off point? b. What is the selling price per pound of Sea Paste at the split-off point at which the company is indifferent?

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: Product Sea Tea Sea Paste Sea Powder Sales Value and Additional Costs If Processed Further Sales Value at Split-Off $ 60,000 80,000 70,000 Pounds Produced 9,000 4,000 2,000 Final Sales Value Additional Cost $ 35,000 50,000 14,000 $ 90,000 160,000 85,000 Required: a-1. Compute the incremental benefit (cost) of further processing to these products. a-2. Which products should Kelp process beyond the split-off point? b. What is the selling price per pound of Sea Paste at the split-off point at which the company is indifferent?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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: Product Sea Tea Sea Paste Sea Powder Sales Value and Additional Costs If Processed Further Sales Value at Split-Off $ 60,000 80,000 70,000 Pounds Produced 9,000 4,000 2,000 Req A1 Required: a-1. Compute the incremental benefit (cost) of further processing to these products. a-2. Which products should Kelp process beyond the split-off point? b. What is the selling price per pound of Sea Paste at the split-off point at which the company is indifferent? Req A2 Final Sales Value Additional Cost $ 35,000 50,000 14,000 Complete this question by entering your answers in the tabs below. $ 90,000 160,000 85,000 X Answer is complete but not entirely correct. Req B < Req A2 What is the selling price per pound of Sea Paste at the split-off point at which the company is indifferent? Note: Round your final answer to 2 decimal places. Selling price at the split-off point at which the company is indifferent $ 20.00 Req B per pound
Transcribed Image Text: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: Product Sea Tea Sea Paste Sea Powder Sales Value and Additional Costs If Processed Further Sales Value at Split-Off $ 60,000 80,000 70,000 Pounds Produced 9,000 4,000 2,000 Req A1 Required: a-1. Compute the incremental benefit (cost) of further processing to these products. a-2. Which products should Kelp process beyond the split-off point? b. What is the selling price per pound of Sea Paste at the split-off point at which the company is indifferent? Req A2 Final Sales Value Additional Cost $ 35,000 50,000 14,000 Complete this question by entering your answers in the tabs below. $ 90,000 160,000 85,000 X Answer is complete but not entirely correct. Req B < Req A2 What is the selling price per pound of Sea Paste at the split-off point at which the company is indifferent? Note: Round your final answer to 2 decimal places. Selling price at the split-off point at which the company is indifferent $ 20.00 Req B per pound
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