Geneva Powder Company Produces Body Powders in Batches Required:
(A) Determine Which Products Should Be Sold at Split-Off

Essay

Geneva Powder Company produces body powders in batches. Each type of powder can be sold in its current condition or processed further and specialized for high-priced department stores. Joint processing costs are $200,000. Data concerning the various products appear below:
$\begin{array}{lr}&& \text { Price per } & \text { Further }& \text { Price after } \\& \text { Number of } & \text { Pounds }& \text { Processing } & \text { Processing } \\\text { Type of Powder } & \text { Pounds } & \text { at Split-Off } & \text { Costs } & \text { Further } \\\text { Cosmetic Powder } & 200,000&\$10 & \$ 150,000 &\$11.50 \\\text { Medicated Powder } & 400,000 &\$8 & \$ 60,000&\$8.40\\\text { Baby Powder } & 50,000&\$ 5 & \$ 80,000&\$5.50\end{array}$
Required:
(a) Determine which products should be sold at split-off and which should be processed further.
(b) The Regis Department Store approaches Geneva Powder. Regis would like Geneva Powder to process Baby Powder into a special powder for its infants department. At what price per pound would Geneva Powder be economically indifferent between selling the powder at the split-off point and processing it further for Regis?