*PLEASE DEMONSTRATE YOUR WORK AS TO HOW YOU ACHIEVED THE ANSWER*
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 |
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| Product | Pounds Produced |
Sales Value at Split Off | Final Sales Value |
Additional Cost |
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| Sea Tea | 9,000 | $ | 60,000 | $ | 90,000 | $ | 35,000 |
| Sea Paste | 3,900 | 72,500 | 160,000 | 50,000 | |||
| Sea Powder | 2,000 | 70,000 | 85,000 | 14,000 | |||
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| a 1 |
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.) |
| Sea Tea | Sea Paste | Sea Powder | |
| Incremental benefit (cost) | $ | $ | $ |
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| a 2 |
Which products should Kelp process beyond the split off point? |
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| 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? (Round your intermediate calculations and final answer to 2 decimal places. Omit the “$” sign in your response.) |
| Minimum price per pound | $ |