Answer:
Sales price =$405
Explanation:
A company should process further a product if the additional revenue from the split-off point is greater than than the further processing cost. Â
Also note that all cost incurred up to the split-off point are irrelevant to the decision to process further . Â
                                          $
Sales revenue after the split-off point            y
Sales revenue at the split-off point (280×20)      (5,600) Â
Further processing cost (40× 20)+ 500           (1,300)  Â
Net advantage from further processing           1,200
y-5600-1300=1200
y= 8,100
Sales price= Â Sales revenue after the split-off point/Number of units
Sales price = 8,100/20 =$405 Â
Sales price =$405