Question: Need help fixing errors in part B Crane Industrial Products Inc. (CIPI) is a diversified industrial-cleaner processing company. The company's Dargan plant produces two products:

Need help fixing errors in part B

Need help fixing errors in part B Crane Industrial Products Inc. (CIPI)is a diversified industrial-cleaner processing company. The company's Dargan plant produces twoproducts: a table cleaner and a floor cleaner from a common set

Crane Industrial Products Inc. (CIPI) 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, 918,000 ounces of chemical input are processed at a cost of $208,200 into 612,000 ounces of floor cleaner and 306,000 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 $251,500. FloorShine sells at $21 per 30-ounce bottle. The table cleaner can be sold for $19 per 25-ounce bottle. However, the table cleaner can be converted into two other products by adding 306.000 ounces of another compound (TCP) to the 306.000 ounces of table cleaner. This joint process will yield 306.000 ounces each of table stain remover (TSR) and table polish (TP). The additional processing costs for this process amount to $109,000. 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 Stain Table Remover Table Cleaner [TSR] Polish (TP) Total Production in ounces 306,000 306,000 306,000 Revenues $232.560 $183,600 $183.600 $367.200 Costs: CDG costs 69.400 52,050 52,050 104,100 TCP costs 0 54,500 54 500 109,000 Total costs 69.400 106,550 106.550 213,100 Weekly gross profit $163.160 $77,050 $77.050 $154,100 "If table cleaner is not processed further, it is allocated 1/3 of the $208,200 of CDG cost, which is equal to 1/3 of the total physical output. "If table cleaner is processed further, total physical output is 1,224,000 ounces. TSR and TP combined account for 50% of the total physical output and are each allocated 25% of the CDG cost.(a) Your answer is correct. 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 $ 201,260 (2) Calculate the company's total weekly gross profit assuming the table cleaner is processed further. Total weekly gross profit 226,900 (3) Compare the resulting net incomes and comment on management's decision. Management made the wrong decision by choosing to not process table cleaner further. eTextbook and Media Attempts: 1 of 3 used(b) Your answer is partially correct. 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).) Don't Process Process Net Income Table Cleaner Table Cleaner Increase Further Further [Decrease) Incremental revenue 660,960 795,600 134,640 Incremental costs (459,700) (568,700) (109,000) Totals 1,120,660 1,364,300 25,640 Table cleaner should be processed further

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!