H & L Beef Products, Inc., processes cattle. It can sell the meat as sides of beef or process it further into final cuts (steaks, roasts, and hamburger). As part of the company's strategic plan, management is looking for new markets for meat or meat by-products. The production process currently separates hides and bones for sale to other manufactures. However, management is considering whether it would be profitable to process the hides into leather and the bones into fertilizer. The costs of the cattle and of transporting, hanging, storing, and cutting sides of beef are $125,000. The company's accountant provided these data:

Should the products be processed further? Explain your answer.

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Sales Revenue Sales Revenue if Sold After if Sold at Additional Product Splitff Further Processin Processing Costs $100,000 Meat Bones Hides 20,000 50,000 $200,000 40,000 55,000 $80,000 15,000 10,000