Further processing decision (continuation of 18-30). Elsie has decided that buttermilk may sell better if it was marketed for baking and sold in pints. This would involve additional packaging at an incremental cost of $0.25 per pint. Each pint could be sold for $0.90. (Note: 1 quart = 2 pints)

1. If Elsie uses the sales value at splitoff method, what combination of products should Elsie sell to maximize profits?

2. If Elsie uses the physical-measure method, what combination of products should Elsie sell to maximize profits?

3. Explain the effect that the different cost allocation methods have on the decision to sell the products a: split off or to process them further.