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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,
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 siver polish Grit 337 is a coarse cleaning powder with many industrial uses. It costs $1.60 a pound to make and it has a seting price of $2.00 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 polsh. The silver polish sets for $4.00 per jar, This further processing requires one-fourth pound of Grit 337 per jar of silver polis. The additional direct variable costs wolved in the processing of a jar of silver polish are: Dehes ingedient Direct labor Total direct cost Overhead costs associated with processing the silver polish are: 251 eet Labo Variable manufacturing overhand Fixed manufacturing overhead cont per month) Production supervisor Depreciation of mixing equipment 53,000 The production supervisor has no duties other than to oversee production of the silver pollsh. The mixing equipment is special purpose equipment acquired specifically to produce the silver polish. It can produce up to 15,000 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 $4,000 per month. Variable seling costs associated with the siwer poish are o sales. Due to a recent decline in the demand for silver polish, the company is wondering whether its continued production sales manager feels that it would be more profitable to sell all of the Grit 337 as a cheaning powder advisable. The References Required: 1 How much incremental revenue does the company cam per jar of polish by further processing Gift 337 rather than selling it as a cleaning powder? (Round your answer to 2 decimal places) 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 company sells 9,000 jars of polish, what is the financial advantage disadvantages of choosing to further process Gr 337 rather than selling is as a cleaning powder? (Enter any disadvantages" as a negative value. Round your intermediate calculations to 2 decimal places.) 5. If the company sells 11,500 jars of polish, what is the financial advantage (disadvantage) of choosing to further process Gift 337 rather than selling is as a cleaning powder? (Enter any disadvantages" as a negative value. Round your intermediate calculations to 2 decimal places.) $ 1. Incremental revenue s 2. Incremental contribution margin 3. Number of fans that must be sold 14. Financial advantage (disadvantage) 15. Financial advantage disadvantage) 1.87 perjar 2.00 per jar per month
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