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QUESTION
Sell or Process Further Port Allen Chemical Company processes raw material D into joint products E and F. Raw material D costs $4 per liter.
Sell or Process Further
Port Allen Chemical Company processes raw material D into joint products E and F. Raw material D costs $4 per liter. It costs $100 to convert 100 liters of D into 60 liters of E and 40 liters of F. Product F can be sold immediately for $4 per liter or processed further into Product G at an additional cost of $6 per liter. Product G can then be sold for $14 per liter.
Determine whether Product F should be sold or processed further into Product G.
- Calculate the net advantage (disadvantage) of further processing.
- Use a negative sign with your answer to indicate a net disadvantage (if applicable).
$ Answer per liter
