The Mussina Chemical Company produced three joint products at a joint cost of $117,000. These products were processed further and sold as follows:

The company has had an opportunity to sell at split-off directly to other processors. If that alternative had been selected, sales would have been A, $54,000; B, $32,000; and C, $54,000.

The company expects to operate at the same level of production and sales in the forthcoming year.

1. Could the company increase operating income by altering its processing decisions? If so, what would be the expected overall operating income?

2. Which products should be processed further and which should be sold at split-off?

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Additional Processing Costs $190,000 300,000 100,000 Chemical Product Sales $230,000 330,000 175,000