with several other ingredients and further processed into Sparkle silver polish. The silver polish sells for $$5\mathrm{.}00$ per jar.

This further processing requires one$-$fourth pound of Grit $337$ per jar of silver polish. The additional variable manufacturing costs per jar of silver polish are:

Other ingredients

Direct labor

Additional variable manufacturing cost

sh are:

Overhead costs associated with processing the silver polish are:

Variable manufacturing overhead cost

Fixed manufacturing overhead cost $($per month$)$

Production supervisor

Depreciation of mixing equipment

$25\%$ of direct labor cost

$$3,300$

$$1,400$

resale value is negligible and it does not wear out through use.

Advertising costs for the silver polish total $$3,700$ per month. Variable selling costs for the silver polish are $5\%$ of sales.

Due to a decline in the demand for silver polish, the company is considering selling all of its Grit $337$ for $$6\mathrm{.}80$ per pound and discontinuing Sparkle silver polish.

Required:

How much incremental revenue does the company earn per jar of polish by further processing Grit $337$ rather than selling it as a cleaning powder?

How much incremental contribution margin does the company earn per jar of polish by further processing Grit $337$ rather than selling it as a cleaning powder?

How many jars of silver polish must be sold each month to exactly offset the avoidable fixed costs incurred to produce and sell the polish?