Answer:
Product X and Z should be processed further because the additional sales revenue is greater that further processing cost which leads to a profit.
Product Y should not be processed further because doing so would lead to a loss
Explanation:
WP Corporation should process further a product if the additional revenue from the split-off point is greater than than the further processing cost.
Also note that all cost incurred up to the split-off point (i.e $92,000) are irrelevant to the decision to process further .
X Y Z
Sales value at split of point 23 24 25
Sales value after split off point 27 27 32
Additional sales value 4 3 7
Further processing cost ( 2) ( 4 ) ( 4)
Net income?(loss) 2 (1 ) 3
Product X and Z should be processed further because the additional sales revenue is greater that further processing cost, which leads to a profit.
Product Y should not be processed further because doing so would lead to a loss
