Sell at split-off or process further

bozo inc. manufactures two products from a joint production process. the joint process costs $110,000 and yields 6,000 pounds of lte compound and 14,000 pounds of hs compound. lte can be sold at split-off for $55 per pound. hs can be sold at split-off for $9 per pound. a buyer of hs asked bozo to process hs further into cs compound. if hs were processed further, it would cost $34,000 to turn 14,000 pounds of hs into 4,000 pounds of cs. the cs would sell for $45 per pound.

required:

1. what is the contribution to income from selling the 14,000 pounds of hs at split-off?
$

2. conceptual connection: what is the contribution to income from processing the 14,000 pounds of hs into 4,000 pounds of cs?
$

1. $126,000

2. $146,000

Explanation:

1. The contribution margin is shown below:

= Number of pounds × split-off  per pound

= 14,000 pounds × $9

= $126,000

2. The contribution margin in another case is shown below:

= Sales - variable cost

where,

Sales = Number of pounds × selling price per pound

         = 4,000 pounds × $45

         = $180,000

And, the processed cost is $34,000 which is a variable cost

Now put these values to the above formula  

So, the value would equal to

= $180,000 - $34,000

= $146,000

Additional contribution = $146,000 - $126,000 = $20,000

make them bite soap instead of you lol

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