Orange Paper Company Processes Wood Pulp into Two Products

question 83

Essay

Orange Paper Company processes wood pulp into two products.During April the joint costs of processing were $132,000.Production and sales value information for the month were as follows:
Paper sells for $2.65 a kilogram and cardboard sells for $3.40 a kilogram.There were no beginning or ending inventories for April.Required:
1.Determine the amounts to be allocated to each product using the:
2.If the cardboard is sold at the splitoff point then the post splitoff factory capacity can be renovated and leased for the year.The cost of the renovation is budgeted at $125,000 and the annual lease revenue will be $165,000.Determine if it is more profitable for the cardboard to be sold at the splitoff point or at the end of production.

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Definitions:

Brands and Customers

The relationship and interaction between companies (brands) and the people who purchase and use their products or services (customers).

Relationship Marketing

A strategy designed to foster customer loyalty, interaction, and long-term engagement by providing value beyond the product or service itself.

Market Segmentation

The process of dividing a target market into smaller, more defined categories of consumers who share similar characteristics and buying preferences.

Brand Loyalty

The tendency of consumers to continuously purchase one brand's products over another, influenced by positive experiences, satisfaction, and perceived value.