Problem 20-3A Sutton Industrial Products Inc. (SIPI) is a diversified industrial-cleaner processing company. The company's Verde plant produces two products: a table cleaner and a floor cleaner from a common set of chemical inputs (CDG). Each week 900,000 ounces of chemical input are processed at a cost of $210,000 into 600,000 ounces of floor cleaner and 300,000 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 $240,000. FloorShine sells at $20 per 30-ounce bottle. The table cleaner can be sold for $18 per 25-ounce bottle. However, the table cleaner can be converted into two other products by adding 300,000 ounces of another compound (TCP) to the 300,000 ounces of table cleaner. This joint process will yield 300,000 ounces each of table stain remover (TSR) and table polish (TP). The additional processing costs for this process amount to $100,000. Both table products can be sold for $14 per 25-ounce 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 Polish (TP Cleaner (TSR) Tota 300,000 Production in ounces 300,000 300,000 $216,000 Revenue $168,000 $168,000 $336,000 Costs: 52,500 CDG costs 52,500 105,000 70,000 50,000 TCP costs 50,000 100,000 102,500 Total costs 70,000 102,500 205,000 $65,500 Weekly gross profit $146,000 $65,500 $131,000 *If table cleaner is not processed further, it is allocated 1/3 of the $210,000 of CDG cost, which is equal to 1/3 of the total physical output. If table cleaner is processed further, total physical output is 200,000 ounces. TSR and TP combined account for 50% of the total physical output and are each allocated 25% of the CDG cost