A M 1 P20 A Determine product should be sold or processed further. 2 Thompson Industrial Products Inc. (TIP) is a diversified industrial-cleaner processing company. The company's Dargar plant produces two products: a table cleaner and a floor cleaner from a common set of chemical Inputs (CDG). Each week 900.000 4 ounces of chemical input are processed at a cost of $210,000 into 600,000 ounces of floor cleaner and 300.000 ounces of table $ cleaner. The floor cleaner has no market value until it is converted into a polish with the trade name Ploor Shine. The additional processing costs for this conversion amount to $240,000. Floor Shine sells at $20 per 30-ounce bottle. The table cleaner can be sold for $17 per 25-ounce botte. However, the table cleaner can be converted into two other products by adding 300,000 ounces of another compound (TCP) to the 300,000 ounces 10 of table cleaner. This joint process will yield 300,000 ounces each of table stain remover (TSA) and table polish (TP). The 11 additional processing costs for this process amounts to $100,000. Both table products can be sold for $14 per $25-ounce bone The company decided not to process the table cleaner into TSR and TP based on the following analysis 7 12 13 19 20 21 14 Process Further 15 Table chable Stain Table 16 Cleaner Remover USA Polish (UP) Total -17 Production in ounces 300.000 300.000 300.000 Revenue $204.000 $168.000 $168.000 Costs CDG costs 70000" 52 500 52,500 105 000 TCP costs 0 50.000 50.000 100.000 Total costs 70,000 102.500 102.500 205.000 23 Wooky gross profit $134,000 $65.500 565,500 $131 000 24 25 "table cleaner is not processed further it is allocated 1/3 of the $210,000 of CDG cost, which is equal to 13 of the 26 total physical output 27 table cleaner is processed further total physical output is 1.200.000 ounces. TSR and TP combined account for 25 50% of the total physical output and are sach allocated 25% of the CDG cost 29 30 Instructions 31 (a) Determine if management made the correct decision to not process the table cleaner further by doing the following 32 (1) Calculate the company's total weekly gross profit assuming the table cleaner is not processed further 33 (2) Calculate the company's total weekdy gross profit assuming the table cleaner is processed further. 34 (3) Compare the resulting net incomes and comment on management's decision 35 (6) Compare the resulting net incomes and comment on managements decision 36 NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a "?". 37 38 39 40 (a) Determine if management made the correct decision to not process the table cleaner further by doing the following (1) Calculate the company's total weekly gross profit assuming the table cleaner is not processed to the P20-3A + 41 MacBook Pro BO 999 esc FI F2 F4 FS @ # 3 $ 4 % 5 & 7 1 2 6 D E 39 40 (a) 41 Determine if management made the correct decision to not process the table cleaner further by doing the following: (1) Calculate the company's total weekly gross profit assuming the table cleaner is not processed further. 43 45 46 Table Cleaner Not Processed Further Sales: Floor Shine ? Table cleaner 2 Total Revenue 49 51 52 Costs: CDG Additional costs of FloorShine Total costs Gross profit Value Value 2 ? 54 55 56 (a 57 50 59 50 Determine if management made the correct decision to not process the table cleaner further by doing the following. (2) Calculate the company's total weekly gross profit assuming the table cleaner is processed further Table Cleaner Processed. Further Sales: Floor Shine Value Table Stain Remover Value Table Polish Value Total Revenue 63 54 65 66 67 Costs CDG Additional costs of Floor Shine TCP Total costs Gross profit Value Value Value 69 70 71 72 73 74 (0) 75 76 72 74 Determine if management made the correct decision to not process the table cleaner further by doing the following (3) Compare the resulting net incomes and comment on management's decision Response: P20-3A MacBook Pro esc F1 Bo F3 ODO DOO F4 55 76 D F H Determine if management made the correct decision to not process the table cleaner further by doing the following (3) Compare the resulting net incomes and comment on management's decision. 73 74 (a) 75 76 77 78 79 0 31 82 83 Response: Compare the resulting net incomes and comment on manageant's decision 85 85 87 (b) 88 89 90 91 Incremental revenue Incremental costs Total Don't Process Table Cleaner Further Value Value ? Process Table Cleaner Further Value Value ? Net Income Increase (Decrease) Value Value ? 93 94 95 96 92 98 99 Response: 100 101 102