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Please Answer A and B The Sun-kissed company manutactures two skin-are lotions, 50 tt 5kin and 5 ikken skin, out of a joint process, The
Please Answer A and B
The Sun-kissed company manutactures two skin-are lotions, 50 tt 5kin and 5 ikken skin, out of a joint process, The joint (common) costs incurred are si20,ooo for a standard production nun that generates 180,000 gallons of Soft skin and 120,000 pallons of silken 5 kin. Addibonal processang costs beyond the split-off point are 51,40 per gallan for Sof skin and so.90 per gallon for siken swin. soft siain sells for $2.40 per galion while silken swin sels for 53.90 per gallon. The Best Eatern Hotel chain has asked the sumikised Compary to supply it with 240,000 gallons of siken skn at a price of $3.05 per gallon. gest Eastern plans to have the Sliken Skin. bottied in 15 -ounce personal-use containers that are suppled in cach of its hotel rooms as part of the complimentary personal products for guest use. If Sun-lassed accepts the order, it wil save 10.05 per gallon in pockaging of siken skin. There is suttlicent excess capacity in sun-kisseds production syatem to handle just one more production run in order to hwe sufficient siken skin for this special order. However, the nature of the jount process aiways resuits in 180.000 gallons of soft 5k in and 120.000 gallons of Silken 5kin Also, the market for Sott skin is saturated hence, any addittonal sales of soft skin would t ake place at a price of s1,60 per gallon. a. What is the profit normally earned on one production nun of soft skin and siamen san? Do not use negative ugns with your answers. b. What is the incremental effect on overall income if the Sun-Eissed Cornpany accepts the special order for Silken skin? Use a fiegateve signs with your answer ocily to ind cate a decrease in overall income. otherwise do not use negative tignt with your anowersi Step by Step Solution
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