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Brand Bleach Company manufactures a bleach used for both domestic and industrial purposes. Currently the company sells its entire monthly output of 80,000 gallons to
Brand Bleach Company manufactures a bleach used for both domestic and industrial purposes. Currently the company sells its entire monthly output of 80,000 gallons to other companies. The customers that purchase the bleach then repackage the bleach and sell it to retailers and end users. The following information is available regarding the manufacture and sale of the bleach: Selling Price per Gallon. $2.40 Variable Costs per Gallon: Direct Materials $0.33 Direct Labor 0.65 Variable Overhead 0.27 Fixed Costs: Overhead $ 33,000 Selling and Admin. $42,000 Brand Bleach has been exploring re-packaging all 100,000 gallons and then selling directly to the retailers and end users themselves. The additional costs associated with re-packaging the bleach would be: Direct materials $0.15 per gallon Direct labor 0.20 per gallon Variable Overhead 0.12 per gallon Fixed Overhead $12,000 Fixed Selling and Admin. $15,000 The re-packaged bleach would sell for $4.10 per gallon. Brand Bleach should (sell now or process further} because net income would increase by
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