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converted into two other products by adding 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, appears to have a very large