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Need some help with the last question b), thanks! Crane Industrial Products Inc. ( ClPl) is a diversied industrial-cleaner processing company. The company's Dargan plant
Need some help with the last question b), thanks!
Crane Industrial Products Inc. ( ClPl) is a diversied industrial-cleaner processing company. The company's Dargan plant produces two products: a table cleaner and a oor cleaner from a common set of chemical inputs {CD'S}. Each week, 855,000 ounces of chemical input are processed at a cost of $ 207,000 into 570,000 ounces offloor cleaner and 285,000 ounces of table cleaner. The floor cleaner has no market value until it is converted into a polish with the trade name FloorShine. The additional processing costs for this conversion amount to $ 258,700. FloorShine sells at $ 21 per 30-ounce bottle. The table cleaner can be sold for$ 19 per 25-ounce bottle. However, the table cleaner can be converted into two other products by adding 285,000 ounces of another compound [TCP] to the 285,000 ounces of table cleaner. Thisjoint process will yield 285,000 ounces each of table stain remover (TSR) and table polish lTP}.The additional processing costs for this process amount to $ 104,000. Both table products can be sold for $ 15 per 25ounce bottle. The company decided not to process the table cleaner into TSR and TP based on the following analysis. Process Further Table Stain Table Remover Table Cleaner {TSR} Polish {TP} Total Production in ounces 285,000 285,000 285,000 Revenues $ 216 600 $ $ 171 000 $ 342 000 ' 17 1,000 ' ' Costs: CDG costs 69,000 ' 51,750 51,750 103,500 ** TCP costs 0 52,000 52,000 104,000 Total costs 69,000 103,750 103,750 207,500 Weekly gross prot $ 147,600 $ 67,250 $ 67,250 $ 134,500 =*lf table cleaner is not processed further, it is allocated 1/3 of the $ 207,000 of CD6 cost, which is equal to 173 of the total physical output. =H'lftable cleaner is processed further, total physical output is 1,140,000 ounces. TSR and TP combined account for 50% ofthe total physical output and are each allocated 25% of the CD6 cost. Determine if management made the correct decision to not process the table cleaner further by doing the following. [1) Calculate the company's total weekly gross prot assuming the table cleaner is not processed further. Total weekly gross prot $ 149900 (2) Calculate the company's total weekly gross prot assuming the table cleaner is processed further. Total weekly gross prot $ (3] Compare the resulting net incomes and comment on management's decision. Management made the decision by choosing to not process table cleanerfurther. eTextbook and Media Attempts: 1 of 5 used b) Using incremental analysis, determine if the table cleaner should be processed further. (Enter negative amounts using eithera negative sign preceding the number eg. -45 or parentheses e3. (45).} Don't Process Process Net Income Table Cleaner Table Cleaner Increase Further Further {Decrease} Incremental revenue $ $ $ Incremental costs Totals $ $ $ Table cleaner v be processed furtherStep by Step Solution
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