Joint Product Decisions

Abstract

Kwisant Oils is a division of Dunan PLC. Its business involves the manufacture of light oils which, when sprayed on to the surface of bodies of water, act to inhibit evaporation. These are used, for example, in desalination works where fresh water is extracted from seawater under desert conditions. The light oils are all derived from a standard mixture of substances called Teilu mixture. This is a product of chemical processes carried out within Kwisant Oils at a cost of £0.70 per litre of mixture produced. The Teilu mixture settles into two layers, with roughly the same volume of liquid in each layer. From the upper, lighter layer, a substance called Baxin is obtained; 5 litres of this layer are sufficient to produce 4 litres of Baxin, at a further processing cost of £0.85 per litre. Baxin serves as a cheap but relatively inefficient evaporation inhibitor, and is sold as a final product to some of Kwisant’s less demanding customers.