Each day, Dunham Corporation processes 1 ton of a secret raw material into (A+)

Each day, Dunham Corporation processes 1 ton of a secret raw material into

two resulting products, AB1 and XY1. When it processes 1 ton of the raw material the

company incurs joint processing costs of $60,000. It allocates $25,000 of these costs to

AB1 and $35,000 of these costs to XY1. The resulting AB1 can be sold for $90,000. Alternatively,

it can be processed further to make AB2 at an additional processing cost of

$50,000, and sold for $150,000. Each day’s batch of XY1 can be sold for $90,000. Alternatively,

it can be processed further to create XY2, at an additional processing cost of

$50,000, and sold for $130,000. Discuss what products Dunham Corporation should make.

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