Problem $13\mathrm{.}29($Algo$)$ Sell or Process Further Declsions $[$L$013-7]$

Come$-$Clean Corporation produces a varlety of cleaning compounds Including Grit $337$ and Sparkle silver polish. Grit $337$ Is a coarse

cleaning powder that costs $$1\mathrm{.}20$ a pound to make and sells for $$6\mathrm{.}60$ a pound. A small portion of Grit $337$ Is combined with several

other Ingredients and further processed Into Sparkle silver polish. The silver polish sells for $$5\mathrm{.}00$ per Jar.

This further processing requires one$-$fourth pound of Grit $337$ per Jar of silver polish. The addltional varlable manufacturing costs per

Jar of silver polish are:

Overhead costs assoclated with processing the silver pollsh are:

The production supervisor has no dutles other than overseelng production of the silver polish. The mixing equipment is special$-$

purpose equipment acquired specifically to produce the silver polish. It can produce up to $1,500$ Jars of polish per month. Its resale

value is negliglble and it does not wear out through use.

Advertlsing costs for the silver polish total $$3,700$ per month. Varlable selling costs for the sllver polish are $5\%$ of sales.

Due to a decline In the demand for silver polish, the company Is considering selling all of its Grit $337$ for $$6\mathrm{.}60$ per pound and

discontinuling Sparkle silver polish.

Required:

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?

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?

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?

If the company sells $7,900$ Jars of polish, what is the financlal advantage $($disadvantage$)$ of choosing to further process Grit $337$

rather than selling it as a cleaning powder?

If the company sells $10,000$ Jars of polish, what is the financlal advantage $($disadvantage$)$ of choosing to further process GrIt $337$

rather than selling it as a cleaning powder?