Wildhorse Industrial Products Inc. is a diversified industrial-cleaner processing company. The company's Dargan plant produces two...
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Wildhorse Industrial Products Inc. 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, 913,500 ounces of chemical input are processed at a cost of $210,600 into 609,000 ounces of floor cleaner and 304,500 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 $253,200. FloorShine sells at $22 per 30-ounce bottle. The table cleaner can be sold for $20 per 25-ounce bottle. However, the table cleaner can be converted into two other products by adding 304,500 ounces of another compound (TCP) to the 304,500 ounces of table cleaner. This joint process will yield 304,500 ounces each of table stain remover (TSR) and table polish (TP). The additional processing costs for this process amount to $104,000. 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. Wildhorse Industrial Products Inc. 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, 913,500 ounces of chemical input are processed at a cost of $210,600 into 609,000 ounces of floor cleaner and 304,500 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 $253,200. FloorShine sells at $22 per 30-ounce bottle. The table cleaner can be sold for $20 per 25-ounce bottle. However, the table cleaner can be converted into two other products by adding 304,500 ounces of another compound (TCP) to the 304,500 ounces of table cleaner. This joint process will yield 304,500 ounces each of table stain remover (TSR) and table polish (TP). The additional processing costs for this process amount to $104,000. 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.
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