A company puts four products through a common production process. This process costs $100,000 each year. The four products can be sold when they emerge from this process at the "split-off point", or processed further and then sold. Data about the four products for the coming period are:
|
|
Unit Sales |
Unit Sales |
|
|
|
Price per pound |
price per pound |
|
|
|
At split off |
After further |
Additional processing |
| Product |
Volume |
Point |
Processing |
Costs |
| Singer |
20,000 lb |
28 |
42 |
400,000 |
| Talker |
10,000 lb |
7 |
28 |
144,000 |
| Walker |
5,000 lb |
36 |
36 |
120,000 |
| Sayer |
5,000 lb |
18 |
18 |
40,000 |
Determine which products should be sold at the split-off point and which should be processed further.