A chemical company carries on production operations in two processes. Materials first pass through process I, where a compound is produced. A loss in weight takes place at the start of processing. The following data, which can be assumed to be representative, relate to the month just ended:
$$
\begin{array}{lr}
\hline \text { Quantities (kg) } \\
\hline \text { Material input } & 200,000 \\
\text { Opening work in process (half processed) } & 40,000 \\
\text { Work completed } & 160,000 \\
\text { Closing work in process (two-thirds processed) } & 30,000
\end{array}
$$
$$
\begin{array}{ll}
\text { Costs }(€) & \\
\hline \text { Material input } & 75,000 \\
\text { Processing costs } & 96,000 \\
\text { Opening work in process: } & \\
\text { Materials } & 20,000 \\
\text { Processing costs } & 12,000
\end{array}
$$
Any quantity of the compound can be sold for £1.60 per kg. Alternatively, it can be transferred to process II for further processing and packing to be sold as Starcomp for £2.00 per kg. Further materials are added in process II such that for every kg of compound used, 2kg of Starcomp result.
Of the 160,000kg per month of work completed in process I, 40,000kg are sold as compound and 120,000kg are passed through process II for sale as Starcomp. Process II has facilities to handle up to 160,000kg of compound per month if required. The monthly costs incurred in process II (other than the cost of the compound) are:
$$
\begin{array}{lcc}
& \begin{array}{c}
120,000 \mathrm{~kg} \text { of } \\
\text { compound input }
\end{array} & \begin{array}{c}
160,000 \mathrm{~kg} \text { of } \\
\text { compound input }
\end{array} \\
\hline \text { Materials (f) } & 120,000 & 160,000 \\
\text { Processing costs }(f) & 120,000 & 140,000
\end{array}
$$
Required:
(a) Determine, using the average method, the cost per kg of compound in process I, and the value of both work completed and closing work in process for the month just ended.
(b) Demonstrate that it is worthwhile further processing 120,000kg of compound.
(c) Calculate the minimum acceptable selling price per kg, if a potential buyer could be found for the additional output of Starcomp that could be produced with the remaining compound.