Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

3 Check my work mode: This shows what is correct or in 33.34 points Cantel Company produces cleaning compounds for both commercial and household

image text in transcribed

3 Check my work mode: This shows what is correct or in 33.34 points Cantel Company produces cleaning compounds for both commercial and household customers. Some of these products are produced as part of a joint manufacturing process. For example, GR37, a coarse cleaning powder meant for commercial sale, costs $1.90 a pound to make and sells for $2.00 per pound. A portion of the annual production of GR37 is retained for further processing in a separate department where it is combined with several other ingredients to form SilPol, which is sold as a silver polish, at $5.00 per unit. The additional processing requires 1/5 pound of GR37 per unit; additional processing costs amount to $4.10 per unit of SilPol produced. Variable selling costs for SilPol average $0.30 per unit. If production of SilPol were discontinued, $2,000 of costs in the processing department would be avoided. Cantel has, at this point, unlimited demand for, but limited capacity to produce, product GR37. Required: 1. Calculate the minimum number of units of SilPol that would have to be sold in order to justify further processing of GR37. 2. Assume that the cost data reported for GR37 are obtained at a level of output equal to 6,600 pounds, which is the maximum that the company can produce at this time. What is the expected operating income (loss) under each of the following scenarios: (a) all available capacity is used to produce GR37, but no SilPol; (b) 6,000 units of SilPol are produced, with the balance of capacity devoted to the production and sale of GR37; (c) 10,000 units of SilPol are produced, with the balance of capacity devoted to the production and sale of GR37; and (d) 12,000 units of SilPol are produced, with the balance of capacity devoted to the production and sale of GR37. Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Calculate the minimum number of units of SilPol that would have to be sold in order to justify further processing of GR37. (Round your answer to nearest whole number.) Minimum number of units of SilPol 0 < Required 1 Required 2 >

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Introduction to Management Accounting

Authors: Charles Horngren, Gary Sundem, Jeff Schatzberg, Dave Burgsta

16th edition

978-0133058819, 9780133059748, 133058816, 133058786, 013305974X , 978-0133058789

More Books

Students also viewed these Accounting questions

Question

Construct a standard turing machine that decide the language

Answered: 1 week ago

Question

The unit used in service costing is simple.

Answered: 1 week ago