Question

Each day, Sandhill Corporation processes 1 ton of a secret raw material into two resulting products, AB1 and XY1. When it processes 1 ton of the raw material. the company incurs joint processing costs of $81,000. It allocates $46,000 of these costs to AB1 and $35,000 of these costs to XY 1. The resulting AB1 can be sold for $121,000. Alternatively, it can be processed further to make AB2 at an additional processing cost of $50,000, and sold for $180,000. Each day's batch of XY 1 can be sold for $118,000. Or, it can be processed further to create XY2, at an additional processing cost of $71,000, and sold for $151,000. What products should Sandhill Corporation make and sell.

          Each day, Sandhill Corporation processes 1 ton of a secret raw material into two resulting products, AB1 and XY1. When it processes 1 ton of the raw material. the company incurs joint processing costs of $81,000. It allocates $46,000 of these costs to AB1 and $35,000 of these costs to XY 1. The resulting AB1 can be sold for $121,000. Alternatively, it can be processed further to make AB2 at an additional processing cost of $50,000, and sold for $180,000. Each day's batch of XY 1 can be sold for $118,000. Or, it can be processed further to create XY2, at an additional processing cost of $71,000, and sold for $151,000. What products should Sandhill Corporation make and sell.

Added by Josep R.

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