Come-Clean Corporation produces a variety of deaning 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 Git 337 and its Sparkle silver polish. 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 $3.60 a pound. A small portion of the annual production of Grit 337ks 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 $4.00 per jat. This further processing requires one-fourth pound of Git 337 per jar of silver polish. The additional ditect variabie costs involved in the processing of a jar of silver polish are: Overhead costs assoclated with processina the sibune wilish .... Ine proauction supervisor has no duties other than to oversee production of the silver pollsh. The mixing equipment is special. purpose squipment acquired specifically to produce the silver polish. it can produce up to 14.500 jars of polish per month. Its resale value is negligble and it does not wear out through use Advertising costs for the silver potish fotal $2,500 per month. Varlable selling costs assoclated with the silver polish are 5% of sales. Dise to a recent deciline in the demand for silver polsth, the company is wondering whether its continued productlon is advisable. The sales manager feels that it would be more profitable to sell all of the Grit 337 as a cleaning powdet. Required: 1. How much incremental revenue does the company earn per jar of polish by further processing Git 337 rather than selling 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 Gilit 337 rather than selling it as a cleaning powder? (Round your intermediate calculotions 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 incuired to produce and sell the polish? (Round your intermediate colculations to 2 decimal places.) 4. If the company sells 8,700 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 "disadvantages" as a negative value. Round your intermediate calculotions to 2 decimal places.) 5. If the company selis 10,600 jars of polish, what is the financial advantage (disadvantage) of choosing to further process Git 337 to 2 decimal pleces.)
