7.

Come-Clean Corporation produces a variety of cleaning compounds and solutions for both industrial and household use. While most of its products are processed independently, a few are related, such as the companys Grit 337 and its Sparkle silver polish.

Grit 337 is a coarse cleaning powder with many industrial uses. It costs $1.60 a pound to make, and it has a selling price of $7.80 a pound. A small portion of the annual production of Grit 337 is retained in the factory for further processing. It is combined with several other ingredients to form a paste that is marketed as Sparkle silver polish. The silver polish sells for $5.00 per jar.

This further processing requires one-fourth pound of Grit 337 per jar of silver polish. The additional direct costs involved in the processing of a jar of silver polish are:

Other ingredients	$	0.50
Direct labor		1.44
Total direct cost	$	1.94

Overhead costs associated with processing the silver polish are:

Variable manufacturing overhead cost		25%	of direct labor cost
Fixed manufacturing overhead cost (per month):
Production supervisor	$	3,200
Depreciation of mixing equipment	$	1,400

The production supervisor has no duties other than to oversee production of the silver polish. The mixing equipment is special-purpose equipment acquired specifically to produce the silver polish. Its resale value is negligible and it does not wear out through use.

Direct labor is a variable cost at Come-Clean Corporation.

Advertising costs for the silver polish total $1,800 per month. Variable selling costs associated with the silver polish are 5% of sales.

Due to a recent decline in the demand for silver polish, the company is wondering whether its continued production is advisable. The sales manager feels that it would be more profitable to sell all of the Grit 337 as a cleaning powder.

Required:
1.	What is the incremental contribution margin per jar from further processing of Grit 337 into silver polish? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
	Incremental contribution margin: ____ per jar

2.	What is the minimum number of jars of silver polish that must be sold each month to justify the continued processing of Grit 337 into silver polish? (Round your intermediate calculations to 2 decimal places.) Number of Jars:_________

8.

Bill has just returned from a duck hunting trip. He has brought home eight ducks. Bills friend, John, disapproves of duck hunting, and to discourage Bill from further hunting, John has presented him with the following cost estimate per duck:

Camper and equipment:
Cost, $1,100; usable for eight seasons; 10 hunting trips per season	$	110
Travel expense (pickup truck):
100 miles at $0.44 per mile (gas, oil, and tires$0.30 per mile; depreciation and insurance $0.14 per mile)		44
Shotgun shells (two boxes)		35
Boat:
Cost, $2,480, usable for eight seasons; 10 hunting trips per season		31
Hunting license:
Cost, $60 for the season; 10 hunting trips per season		6
Money lost playing poker:
Loss, $26 (Bill plays poker every weekend)		26
Bottle of whiskey:
Cost, $25 (used to ward off the cold)		25
Total cost	$	233
Cost per duck ($233 8 ducks)	$	29

Required:
1.	Assuming that the duck hunting trip Bill has just completed is typical, what costs are relevant to a decision as to whether Bill should go duck hunting again this season?

2.	Suppose that Bill gets lucky on his next hunting trip and shoots 10 ducks in the amount of time it took him to shoot 8 ducks on his last trip. How much would it have cost him to shoot the last two ducks?