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Bod Canada purchases 3 chemicals which are then processed to produce 2 types of powders (Tulip and Neem) that are used as ingredients for Bodgs

Bod Canada purchases 3 chemicals which are then processed to produce 2 types of powders (Tulip and Neem) that are used as ingredients for Bodgs that Bod Canada manufactures.

The production process is as follows: The chemicals are blended for 4 hours and heated for 20 minutes. The results are 2 powders, Tulip and Neem.

For every 1,100 kilograms of chemicals used, 500 kilograms of Tulip and 500 kilograms of Neem are created. Tulip and Neem can be sold to external customers: $10 per kilogram for Tulip and $25 per kilogram for Neem. The cost to produce 500 kilograms of either Tulip and Neem are as follows:

  • Chemicals - $5,500
  • Direct labour - $4,500
  • Overhead - $3,500

Tulip and Neem are packaged in 25 kilogram bags and shipped. The cost of each bag is $0.75. Shipping costs are $0.10 per kilogram.

BOD can also process Tulip further by heating it up and moulding it into a gel. The gel can be sold directly to Bodgstores. If BOD plans to work this, the revenue received per bottle of gel would be $3.00, with 5 bottles produced for every kilogram of Tulip. The costs of heating and moulding are $2.50 per kilogram of Tulip. Bottles cost $0.20 each and bottles are shipped in boxes of 25 at a shipping cost of $1.23 per box.

Required. Assume that BOD decided to process the Tulip into a gel. Calculate the net inflows or outflows for 500 kilograms of Tulip if BOD decides to process it further. Enter 0 if something should be not be included. Do not use $ signs in your final answers.

Process the Tulip Further

Cost Total (Enter an inflow as a positive number, and an outflow as a negative number)
Incremental Revenues $
Bags $
Shipping $
Heating/Moulding $
Bottles $
Overall Impact on NIFTP $

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