Answer:
Processing QI further would lead to a loss of ($5,200)
Explanation:
<em>A company should process further a product if the additional revenue from the split-off point is greater than than the further processing cost. </em>
<em>Also note that all cost incurred up to the split-off point are irrelevant to the decision to process further . </em>
<em>Financial disadvantage of processing QI further</em>
$
Sales revenue after the split-off point (13× 2,800) 36,400
Sales revenue at the split-off point (11× 2,800) <u> (30,800)
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Additional sales revenue 5,600
Further processing cost <u> ( 10,800)</u>
Net advantage from further processing 1,200 <u> (5,200)</u>
Processing QI further would lead to a financial disadvantage of ($5,200)
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