Question
The company decided not to process the table cleaner into TSR and TP based on the following analysis. Process Further Table Cleaner Table Stain Remover
The company decided not to process the table cleaner into TSR and TP based on the following analysis. Process Further Table Cleaner Table Stain Remover (TSR) Table Polish (TP) Total Production in ounces 292,500 292,500 292,500 Revenues $234,000 $175,500 $175,500 $351,000 Costs: CDG costs 70,800 * 53,100 53,100 106,200 ** TCP costs 0 50,500 50,500 101,000 Total costs 70,800 103,600 103,600 207,200 Weekly gross profit $163,200 $71,900 $71,900 $143,800 *If table cleaner is not processed further, it is allocated 1/3 of the $212,400 of CDG cost, which is equal to 1/3 of the total physical output. **If table cleaner is processed further, total physical output is 1,170,000 ounces. TSR and TP combined account for 50% of the total physical output and are each allocated 25% of the CDG cost. Collapse question part (a) Determine if management made the correct decision to not process the table cleaner further by doing the following. (1) Calculate the companys total weekly gross profit assuming the table cleaner is not processed further. Total weekly gross profit $ (2) Calculate the companys total weekly gross profit assuming the table cleaner is processed further. Total weekly gross profit $ (3) Compare the resulting net incomes and comment on managements decision. Management made the decision by choosing to not process table cleaner further.
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