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Using incremental analysis, determine if the table cleaner should be processed further. (Enter negative amounts using either a negative sign preceding the number e.g. -45
Using incremental analysis, determine if the table cleaner should be processed further. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Sutton Industrial Products Inc. (SIPI) is a diversified industrial-cleaner processing company. The company?s Verde plant produces two products: a table cleaner and a floor cleaner from a common set of chemical inputs (CDG). Each week 924,300 ounces of chemical input are processed at a cost of $210,900 into 616,200 ounces of floor cleaner and 308,100 ounces of table cleaner. The floor cleaner has no market value until it is converted into a polish with the trade name Floor Shine. The additional processing costs for this conversion amount to $245,555. Floor Shine sells at $20 per 30-ounce bottle. The table cleaner can be sold for $30 per 25-ounce bottle. However, the table cleaner can be converted into two other products by adding 308,100 ounces of another compound (TCP) to the 308,100 ounces of table cleaner. This joint process will yield 308,100 ounces each of table stain remover (TSR) and table polish (TP). The additional processing costs for this process amount to $100,900. Both table products can be sold for $22 per 25-ounce bottle. The company decided not to process the table cleaner into TSR and TP based on the following analysis. If table cleaner is not processed further, it is allocated 1/3 of the $210,900 of CDG cost, which is equal to 1/3 of the total physical output. If table cleaner is processed further, total physical output is 1,232,400 ounces. TSR and TP combined account for 50% of the total physical output and are each allocated 25% of the CDG cost
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