chapter 13

Come Clean Corporation produces a variety of cleaning compounds and solutions for both industrial and household use. While most of its products are processed independently, a few are related, such as the company's Grit 337 and its Sparkle silver polish Git 337 is a coarse cleaning powder with many industrial uses. It costs $120 a pound to make, and it has a selling price of $280 a pound. A small portion of the annual production of Grit 337 is retained in the factory for further processing. It is combined with several other ingredients to form a paste that is marketed as Sparkle silver polish. The silver polish sells for $400 per jar This further processing requires one fourth pound of Grit 337 per jar of silver polish. The additional direct variable costs involved in the processing of a lar of siver polish are: Overhead costs associated with processing the silver polish are: The production supervisor has no duties other than to oversee production of the stlver polish. The mixing equipment is special: purpose equipment acquired specifically to produce the silver polish. It can. produce up to 6,500 jars of polish per month. Its tesale value is negligible and it does not wear out through use. Advertising costs for the silver polish totol 53.800 per month. Variable selling costs associated with the silver polish are 5 Ni of sales. I Ine production supervisor has no cutres other than to oversee production of the sitver polish. ine muxirig equpment is special purpose equipment acquired specifically to produce the silver polish. It can produce up to 6,500 jars of polish per month. its resale value is negligible and it does not wear out through use Advertising costs for the silver polish total $3.800 per month. Variable seling costs associated with the silver polith are 5% of sales Due to a recent decline in the demand for silver pollsh, the compary is wondering whether its continued production is advisable. The sales manager feels that it would be more profitable to sell all of the Grit 337 as a cleaning powder. Required: 1. How much incremental revenue does the company eam per jar of polish by further processing Gat 337 rather than seling it as a cleaning powder? (Round your answer to 2 decimal ploces.) 2. How much incremental contribution margin does the company earn per jar of polish by further processing Grit 337 rather than selling it as a cleaning powder? (Round your intermediate calculations and final answer to 2 decimal places.) 3. How many jars of silver polish must be sold each month to exactly offset the avoidable fixed costs incurred to produce and sell the polish? (Round your intermediate calculations to 2 decimal places.) 4. If the cornparyy selts 7,100.jars of polish, what is the financlal advantage (disadvantage) of choosing to further process Git 337 rather than selling it as a cleaning powder? (Enter any "disodvantoges" as a negotive volue. Round your intermediote calculations to 2 decimal places.) 5. If the company selis 10,300 jars of polish, what is the financial advantage (disadvantage) of choosing to further process Grit 337 rather than selling is as a cleaning powder? (Enter any "disndvantages" as a negative value. Round your intermediote calculations to 2 decimal places.) than selling it as a cleaning powder? decimal places.) 5. If the company sells 10.300 jars of polish, what is the financial advantage (disadvantage) of choosing to further rather than selling is as a cleaning powder? (Enter any "disadvantages" as a negative value. Round your intern to 2 decimal places.)