Each Week Walters Company Produces 15,000 Pounds of Product a and 30,000

question 9

Essay

Each week Walters Company produces 15,000 pounds of Product A and 30,000 pounds of Product B by incurring a joint cost of $400,000. These two products can be sold as is or processed further. Further processing of either product does not delay the production of subsequent batches of the joint product. Data regarding these two products are as follows: $$\begin{array} { | l | r | r | } \hline & \begin{array} { r } \text { Product }\end{array} & \text { Product } \\& \text {A}& \text {B}\\\hline \begin{array} { l } \text { Selling price per pound without } \\\text { further processing }\end{array} & \$ 12.00 & \$ 9.00 \\\hline \begin{array} { l } \text { Selling price per pound with } \\\text { further processing }\end{array} & \$ 15.00 & \$ 11.00 \\\hline \begin{array} { l } \text { Total separate weekly variable } \\\text { costs of further processing }\end{array} & \$ 50,000 & \$ 45,000 \\\hline\end{array}$$ Required:
To maximize Walters Company's manufacturing contribution margin, how much total separate variable costs of further processing should be incurred each week?

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