Reference no: EM132563676

Chirp Inc. manufactures two products from a joint production process. The joint process costs $150,000 and yields 10,000 kilograms of PEROX compound and 32,000 kilograms of EPTOL compound. PEROX can be sold at split-off for $40 per kilogram. EPTOL can be sold at split-off for $6 per kilogram. A buyer of EPTOL asked Chirp Inc. to process EPTOL further into CHLOR compound. If EPTOL were processed further, it would cost $205,000 to turn 32,000 kilograms of EPTOL into 9,000 kilograms of CHLOR. The CHLOR would sell for $60 per kilogram.

Required:

Question 1: The contribution to income from selling the 32,000 kilograms of EPTOL at split-off would be $

Question 2: The contribution to income from processing the 32,000 kilograms of EPTOL into 9,000 kilograms of CHLOR would be $

Therefore, Chirp should

Question 3: ______(process further, sell at split-off). The profit to the company would be______(higher, lower) by $______if it processed further.

Remember to enter numeric amounts without a $ or , (a comma). If the answer is $20,000.00, then enter the number as 20000. Remember to round to 2 decimal places. For numbers such as 1.456, round up to 1.46 and for numbers such as 1.452, round down to 1.45