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QUESTION 1

1. Matts Beverages Limited produces Tomato Juice. The leftover Tomato Skins represent a second joint product that the company can sell to Sauce Producers. The cost to produce 341 ml of Tomato Juice is 50 cents, prior to the the cost of the can which is 10 cents. The company can sell the 341 ml Can of Tomato Juice for 90 cents. The company can sell the leftover Tomato Skins of each 341 ml can of Tomato Juice for 2 cents to a Sauce Producer.

   The Vice President of Sales has provided the company with two futher processing options:

   1) The Company can add Clam Juice to the Tomato Juice at a cost of 15 cents per 341 ml can and create a "Clamato Juice". The company can then sell this "Clamato Juice "product for $1.00

   2) If the company begins to produce "Clamato Juice", the company has a further procsessing option afterwards. It can add voldka to the "Clamato Juice" at a cost of 25 cents per 341 ml can and can sell it to the L.C.B.O. as a "Caesar Beverage" at a price of $1.40

   Required: If you were the company Executive in charge of making the decision, what would you do and why? Explain your answer fully with supporting calculations.

2. This is management accounting. Please complete fully all requirements above. Thank you very much!

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