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Come-Clean Corporation produces a variety of cleaning compounds including Grit 337 and Sparkle silver polish. Gnt 337 is a coarse cleaning powder that costs $1.20

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Come-Clean Corporation produces a variety of cleaning compounds including Grit 337 and Sparkle silver polish. Gnt 337 is a coarse cleaning powder that costs $1.20 a pound to make and sells for $7.60 a pound. A small portion of Grit 337 is combined with several other ingredients and further processed into Sparkle siver polish. The siver polish sells for $5.00 per jar. This further processing requires one-fourth pound of Grit 337 per jar of siver polish. The additional varieble manufacturing costs per jar of silver polsh are: Overhead costs assoclated with processing the silver polish are: The production supervisor has no duties other than overseeing production of the siver polish. The mixing equipment is special. purpose equipment acquired specifically to produce the siver polish. it can produce up to 8,000 jars of polish per month. its resale value is negligible and it does not wear out through use. Advertsing costs for the siver polish total \$3,000 per month. Variable selling costs for the silver polish are 5\% of sales. Due to a decline in the demand for silver polish, the company is comsidering selling all of its Gnt 337 for $7.60 per pound and discontinuing Sparkle slver polish. Required: 1. How much incremental revenue does the company earn per jaf of polish by further processing Grit 337 rather than selling it as a cleaning powder? 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? 3. How many jars of silver polish must be sold each month to exactly offset the avoidable fixed costs incurred to produce and sel the polish? 4. If the company sells 8,400 jars of polish, what is the financlal advantage (disadvantage) of choosing to further process Grit 337 rather than selling it as a cleaning powder? 5. If the company sells 11,700 jars of polish, what is the financial advantage (disadvantage) of choosing to further process Grit 337 rather than selling it as a cleaning powder

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