Mathematics · Managerial Accounting

Products L, M, and S are produced by Division Ace as outputs of a process at the split-off point. They may be sold externally, or transferred to Division Beta for further processing. In November, Division Ace’s output was as follows: Product L: 1,200 Kg Product M: 1,400 Kg Product S: 1,800 Kg The market selling prices per kg for the products, both at the split-off point and after further processing, are as follows: Product L: $5.60 (at split-off), $6.70 (after further processing) Product M: $6.50 (at split-off), $7.90 (after further processing) Product S: $6.10 (at split-off), $6.80 (after further processing) The specific variable costs for each of the individual further processes are: Product L: $0.50 per kg Product M: $0.70 per kg Product S: $0.80 per kg Which of the products should be further processed in Division Beta in order to optimize the profit for the company?