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300,000 ounces of another compound (TCP) to the 300,000
ounces of table cleaner. This joint process will yield 300,000
ounces each of table stain remover (TSR) and table polish (TP).
The additional processing costs for this process amount to
$100,000. Both table products can be sold for $14 per 25-ounce
bottle.
The company decided not to process the table cleaner into TSR
and TP based on the following analysis.
Instructions
1.
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.
2. Calculate the company's total weekly gross profit assuming
the table cleaner is processed further.
(2) Gross profit $186,000
3. Compare the resulting net incomes and comment on
management's decision.
2.
using incremental analysis, determine if the table
cleaner should be processed further.
E8-2
Eckert Company is involved in producing and selling high-end
golf equipment. The company has recently been involved in
developing various types of laser guns to measure yardages on
the golf course. One small laser gun, called Little Laser,