Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Problem 12-3 Bridgeport Industrial Products Inc. is a diversified industrial-cleaner processing company. The company's Dargan plant produces two products: a table cleaner and a floor

image text in transcribedimage text in transcribedimage text in transcribed

Problem 12-3 Bridgeport Industrial Products Inc. is a diversified industrial-cleaner processing company. The company's Dargan plant produces two products: a table cleaner and a floor cleaner from a common set of chemical inputs (CDG). Each week, 846,000 ounces of chemical input are processed at a cost of $212,700 into 564,000 ounces of floor cleaner and 282,000 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 $259,300. FloorShine sells at $19 per 30-ounce bottle. The table cleaner can be sold for $20 per 25-ounce bottle. However, the table cleaner can be converted into two other products by adding 282,000 ounces of another compound (TCP) to the 282,000 ounces of table cleaner. This joint process will yield 282,000 ounces each of table stain remover (TSR) and table polish (TP). The additional processing costs for this process amount to $101,000. Both table products can be sold for $16 per 25-ounce bottle. de le seves the se cond parte per ser vente tiene The company decided not to process the table cleaner into TSR and TP based on the following analysis. Process Further Table Stain Remover Table (TSR) Polish (TP) 282,000 282,000 $180,480 $180,480 Total Table Cleaner 282,000 $225,600 Production in ounces Revenues $360,960 70,900 * Costs: CDG costs TCP costs Total costs Weekly gross profit 53,175 50,500 103,675 $76,805 53,175 50,500 103,675 106,350 ** 101,000 207,350 70,900 $154,700 $76,805 $153,610 *If table cleaner is not processed further, it is allocated 1/3 of the $212,700 of CDG cost, which is equal to 1/3 of the total physical output. **If table cleaner is processed further, total physical output is 1,128,000 ounces. TSR and TP combined account for 50% of the total physical output and are each allocated 25% of the CDG cost. Your answer is partially correct. Try again. 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 profit assuming the table cleaner is not processed further. Total weekly gross profit (2) Calculate the company's total weekly gross profit assuming the table cleaner is processed further. Total weekly gross profit Total weekly gross profit u (3) Compare the resulting net incomes and comment on management's decision. A wrong Management made the decision by choosing to not process table cleaner further. Your answer is partially correct. Try again. Using incremental analysis, determine if the table cleaner should be processed further. (If amount decreases net income then enter the amount using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Don't Process Table Cleaner Further Process Table Cleaner Further Net Income Increase (Decrease) Incremental revenue 225600 Incremental costs 1000 -101000 Totals 225600 $

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Costing

Authors: Lucey

7th Edition

1844809439, 978-1844809431

More Books

Students also viewed these Accounting questions

Question

Where do I give in to my bad habit?

Answered: 1 week ago

Question

How effective have these groups been in the past?

Answered: 1 week ago

Question

What are their reputations?

Answered: 1 week ago

Question

How serious a response is warranted to this situation?

Answered: 1 week ago