Problem 7-3A Thompson Industrial Products Inc. (TIPI) is a diversified industrial-cleaner processing company. The company's Dargan plant produces two products: a table cleaner and a floor deaner from a common set of chemical inputs (CDG). Each week, 918,000 ounces of chemical input are processed at a cost of $208,200 into 612,000 ounces of floor cleaner and 306,000 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 $251,500 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 306,000 ounces of another compound (TCP) to the 306,000 ounces of table cleaner. This joint process will yield 306,000 ounces each of table stain remover (TSR) and table polish (TP). The additional processing costs for this process amount to $109,000. Both table products can be sold for $15 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 Remover Table Cleaner 306,000 $232,560 Table Polish (TP) Total 306,000 $183,600 $367,200 Production in ounces 306,000 $183,600 CDG costs TCP costs 52,050 54,500 106,550 $77,050 69,400 52,050 104,100* 69,400 $163,160 54,500 109,000 106,550 213,100 $77,050 $154,100 Total costs Weekly gross profit If table cleaner is not processed further, it is allocated 1/3 of the $208,200 of CDG cost, which is equal to 1/3 of the total physical output. **If table cleaner is processed further, total physical output is 1,224,000 ounces. TSR and TP combined account for 50% of the total physical output and are each allocated 25% of the CDG cost