Question
SHOW MATh CALCULATION (formulas )T hompson Industrial Products Inc. (TIPI) is a diversifi ed industrial-cleaner processing company. The companys Dargan plant produces two products: a
SHOW MATh CALCULATION (formulas )T
hompson Industrial Products Inc. (TIPI) is a diversifi ed industrial-cleaner processing company. The companys Dargan plant produces two products: a table cleaner and a fl oor cleaner from a common set of chemical inputs (CDG). Each week, 900,000 ouncesof chemical input are processed at a cost of $210,000 into 600,000 ounces of fl oor cleanerand 300,000 ounces of table cleaner. The fl oor 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 $17 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.
a
Table Cleaner Not Processed Further |
1-2-3
b
Don't Process | Process | Net Income |
Table Cleaner | Table Cleaner | Increase |
Further | Further | (Decrease) |
+ b comment
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