Question
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 $2.40 per Gallon Variable Costs per Gallon: Direct $0.33 Material Direct $0.65 Labor Variable $0.27 Overhead Fixed Costs per Period: Fixed $33,000 Overhead Fixed Selling and $42,000 Admin Brand Bleach has been exploring re-packaging all 80,000 gallons and then Brand Bleach has been exploring re-packaging all 80,000 gallons and then selling the re-packaged bleach directly to the retailers and end users themselves. The re-packaged bleach could be sold for $4.10 per gallon. The additional costs associated with re-packaging the bleach would be: Variable Costs per Gallon: Direct Material $0.15 Direct Labor $0.20 Variable $0.12 Overhead Fixed Costs per Period: A Fixed $12,000 Overhead Fixed Selling $15,000 and Admin The re-packaged bleach would sell for $4.10 per gallon. Brand Bleach should (type in sell now or process further because net income would increase by (type in your dollar amount of change)
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