Question

Problem 7-3A Part Level Submission) (Video) 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, 895,500 ounces of chemical input are processed at a cost of $210,900 into 597,000 ounces of floor cleaner and 298,500 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 $248,100. FloorShine sells at $19 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 298,500 ounces of another compound (TCP) to the 298,500 ounces of table cleaner. This joint process will yield 298,500 ounces each of table stain remover (TSR) and table polish (TP). The additional processing costs for this process amount to $107,000. 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 Cleaner Table Stain Remover (TSR) Table Polish (TP) Total Production in ounces 298,500 298,500 298,500 Revenues $238,800 $179,100 $179,100 $358,200 Costs:    CDG costs 70,300 * 52,725 52,725 105,450 **    TCP costs 0 53,500 53,500 107,000      Total costs 70,300 106,225 106,225 212,450 Weekly gross profit $168,500 $72,875 $72,875 $145,750 *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 1,194,000 ounces. TSR and TP combined account for 50% of the total physical output and are each allocated 25% of the CDG cost. (a) 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 rightwrong decision by choosing to not process table cleaner further. Click if you would like to Show Work for this question: Open Show Work By accessing this Question Assistance, you will learn while you earn points based on the Point Potential Policy set by your instructor. Attempts: 0 of 15 used SAVE FOR LATER SUBMIT ANSWER (b) The parts of this question must be completed in order. This part will be available when you complete the part above.

Answer 1