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,931,500ounces of chemical input are processed at a cost of $207,300into621,000ounces of floor cleaner and310,500ounces 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 $257,400.

FloorShine sells at $20per 30-ounce bottle. The table cleaner can be sold for $21per 25-ounce bottle. However, the table cleaner can be converted into two other products by adding310,500ounces of another compound (TCP) to the310,500ounces of table cleaner. This joint process will yield310,500ounces each of table stain remover (TSR) and table polish (TP). The additional processing costs for this process amount to $106,000. Both table products can be sold for $15per 25-ounce bottle.

The company decided not to process the table cleaner into TSR and TP based on the following analysis.

table cleaner table stain Table Polish Total

Production in ounces 310,500 310,500 310,500

Revenues $260,820 $186,300 $186,300 $372,600

Costs:

CDG costs 69,100 * 51,825 51,825 103,650 **

TCP costs 0 53,000 53,000 106,000

Total costs 69,100 104,825 104,825 209,650

Weekly gross profit $191,720 $81,475 $81,475 $162,950

*If table cleaner is not processed further, it is allocated 1/3 of the $207,300of CDG cost, which is equal to 1/3 of the total physical output.

**If table cleaner is processed further, total physical output is1,242,000ounces. TSR and TP combined account for 50% of the total physical output and are each allocated 25% of the CDG cost.

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.

(2) Calculate the company's total weekly gross profit assuming the table cleaner is processed further.

(3) Compare the resulting net incomes and comment on management's decision.

Using incremental analysis, determine if the table cleaner should be processed further.