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 pollsh. Grit 337 is a coarse cleaning powder with many industrial uses. It costs $1.60 a pound to make, and it has a selling price of $6.60 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 $5.00 per jar. This further processing requires one-fourth pound of Git 337 per jar of silver pollsh. The additional direct variable costs involved in the processing of a jar of silver polish are: Overhead costs assoclated with processing the silver polish are: direct labor cost The production supervisor has no duties other than to oversee production of the silver polish. The mixing equipment is speclal. purpose equipment acquired specifically to produce the silver pollsh. tt can produce up to 6.000 jars of polish per month, its resale value is negilibible and it does not wear out through use. Advertising costs for the slver polish total $3,800 per month. Variable selling costs assoclated with the silver pollsh are 5% of sales. Due to a recent decline in the demand for silver polish, the company is wondering whetherits continued production is advisable. The sales manager feeis 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 earn per jar of polish by further processing Grit 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 far 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 7,500 jars of polish, what is the financial advantage (disadvantage) of choosing to further process Grit 337 rather than selling it as a cleaning powder? (Enter any "disadvantages" as a negative value. Round your intermediate calculations to 2 decimal places.) 5. If the company setts 11.200 jafs of polish, what is the financial advantage (disadvantage) of choosing to further process Git 337 rather than seling is as a cleaning powder? (Enter ony "disadvantages" as a negative value. Round your intermediate calculotions to 2 decimal places.) 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 pollsh. Grit 337 is a coarse cleaning powder with many industrial uses. It costs $1.60 a pound to make, and it has a selling price of $6.60 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 $5.00 per jar. This further processing requires one-fourth pound of Git 337 per jar of silver pollsh. The additional direct variable costs involved in the processing of a jar of silver polish are: Overhead costs assoclated with processing the silver polish are: direct labor cost The production supervisor has no duties other than to oversee production of the silver polish. The mixing equipment is speclal. purpose equipment acquired specifically to produce the silver pollsh. tt can produce up to 6.000 jars of polish per month, its resale value is negilibible and it does not wear out through use. Advertising costs for the slver polish total $3,800 per month. Variable selling costs assoclated with the silver pollsh are 5% of sales. Due to a recent decline in the demand for silver polish, the company is wondering whetherits continued production is advisable. The sales manager feeis 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 earn per jar of polish by further processing Grit 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 far 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 7,500 jars of polish, what is the financial advantage (disadvantage) of choosing to further process Grit 337 rather than selling it as a cleaning powder? (Enter any "disadvantages" as a negative value. Round your intermediate calculations to 2 decimal places.) 5. If the company setts 11.200 jafs of polish, what is the financial advantage (disadvantage) of choosing to further process Git 337 rather than seling is as a cleaning powder? (Enter ony "disadvantages" as a negative value. Round your intermediate calculotions to 2 decimal places.)
