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 cleaner from a common set of chemical inputs (CDG). Each week, 346,000 ounces of chemical Input are processed at a cost of $209, 100 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 $250.100. FloorShine sells at $19 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 202.000 Ounces of another compound (TCP) to the 282.000 ounces of table cleaner. This joint process will yield 262.000 ounces each of table stain remover (TSR) and table polish (TP). The additional processing costs for this process amount to $110,000. 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 Table Remover Table Cleaner (TSR) Polish (TP) Total Production in ounces 282,000 202.000 282,000 Revenues 5214,320 $169,200 5169,200 $330,400 Costs: CDG costs 69,700 - 52,275 52,275 104,550 TCP costs 55,000 55,000 110.000 Total costs 69,700 107,275 107,275 214,550 Weekly grous prolit $144,620 $61,925 $61.925 $123,850 D *Itable cleaner is not processed further it is allocated 1/3 of the $209,100 of COG cost, which is equal to 1/3 of the total physical output **If table cleaner is processed further, total physical output is 1,120,000 ounces. TSR and Te combined account for 50% of the total physical output and are asch allocated 25 of the CDG 001 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 $ (3) Compare the resulting net incomes and comment on management's decision. Management made the decision by choosing to not process table cleaner further Using incremental analysis, determine f the table cleaner should be processed further. (Enter Don't Process Table Cleaner Further Process Table Cleaner Further Net Income Increase (Decrease) Incremental revenue 237600 356400 118800 a> Incremental costs 0 - 109000 - 109000 Totals 237600 247400 9800 TA should Table cleaner be processed further
