Explore BrainMass

Managerial Accounting

Paulsen Company makes two products, W and P, in a joint process. At the split-off point, 50,000 units of W and 60,000 units of P are available each month. Monthly joint production costs are 290,000. Product W can be sold at the split-off point for 5.60 per unit. Product P either can be sold at the split-off point for 4.75 per unit or it can be further processed and sold for 7.20 per unit. If P is processed further, additional processing costs of 3.10 per unit will be incurred.
Reference: 13-19

What would the selling price per unit of Product P need to be after processing in order for Paulsen Company to be economically indifferent between selling P at the split-off point or processing P further?