Cantel Company produces cleaning compounds for both commercial and household customers. Some of these products are produced

as part of a joint manufacturing process. For example, GR$37,$ a coarse cleaning powder meant for commercial sale, costs $$2\mathrm{.}70$ a

pound to make and sells for $$2\mathrm{.}80$ per pound. A portion of the annual production of GR$37$ is retained for further processing in a

separate department where it is combined with several other ingredients to form SilPol, which is sold as a silver polish, at $$6\mathrm{.}00$ per

unit. The additional processing requires $\frac{1}{4}$ pound of GR$37$ per unit; additional processing costs amount to $$4\mathrm{.}50$ per unit of SilPol

produced. Variable selling costs for SilPol average $$0\mathrm{.}30$ per unit. If production of SilPol were discontinued, $$5,000$ of costs in the

processing department would be avoided. Cantel has, at this point, unlimited demand for, but limited capacity to produce, product

GR$37.$

Required:

Calculate the minimum number of units of SilPol that would have to be sold in order to justify further processing of GR$37.$

Assume that the cost data reported for GR$37$ are obtained at a level of output equal to $7,000$ pounds, which is the maximum that the

company can produce at this time. What is the expected operating income $($loss$)$ under each of the following scenarios: $($a$)$ all available

capacity is used to produce GR$37,$ but no SilPol; $($b$)8,000$ units of SilPol are produced, with the balance of capacity devoted to the

production and sale of GR$37$; $($c$)10,000$ units of SilPol are produced, with the balance of capacity devoted to the production and sale

of GR$37$; and $($d$)12,000$ units of SilPol are produced, with the balance of capacity devoted to the production and sale of GR$37.$

Complete this question by entering your answers in the tabs below.

Calculate the minimum number of units of SilPol that would have to be sold in order to justify further processing of GR$37.$

$($Round your answer to nearest whole number.$)$