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

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