Paulsen Corporation Makes Two Products, W and P, in a Joint

question 89

Multiple Choice

Paulsen Corporation makes two products, W and P, in a joint process.At the split-off point, 50, 000 units of W and 60, 000 units of P are available each month.Monthly joint production costs are $290, 000.Product W can be sold at the split-off point for $5.60 per unit.Product P either can be sold at the split-off point for $4.75 per unit or it can be further processed and sold for $7.20 per unit.If P is processed further, additional processing costs of $3.10 per unit will be incurred. What would the selling price per unit of Product P need to be after processing in order for Paulsen Corporation to be economically indifferent between selling P at the split-off point or processing P further?

• A)$7.85
• B)$8.58
• C)$9.49
• D)$11.68

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Definitions:

Bystander Intervention Effect

The phenomenon where the presence of others can influence an individual's likelihood to help a person in distress, often reducing the likelihood of intervention.

Risky-Shift

Refers to the phenomenon where groups tend to make riskier decisions together than individuals would on their own.

Group Polarization

The inclination of a collective to reach decisions that are significantly more radical than the initial tendencies of the individual members.

Reciprocal Helping

A social behavior where individuals help others with the expectation that these others will help in return in the future.