Answer:
1) Financial advantage = $15,100
2) X15 should be processed further because it would generate 15,100
Explanation:
A company should process a product further 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 are irrelevant to the decision to process further .
$
Sales revenue after further processing
(19×8,300) 157,700
Sales revenue at the split-off point
(16×8,300) <u> 132,800</u>
Additional sales revenue from further processing 24,900
Less further processing cost <u> (9,800)</u>
Financial advantage <u> 15,100</u>
Financial advantage = $15,100
X15 should be processed further because it would generate 15,100
