Come-clean corporation produces a variety of cleaning

Assignment Help Accounting Basics

Reference no: EM13599654

Come-Clean Corporation produces a variety of cleaning compounds and solutions for both industrial and household use. While most of its products are processed independently, a few are related, such as the company's Grit 337 and its Sparkle silver polish.

Grit 337 is a coarse cleaning powder with many industrial uses. It costs $1.58 a pound to make, and it has a selling price of $3.00 a pound. A small portion of the annual production of Grit 337 is retained in the factory for further processing. It is combined with several other ingredients to form a paste that is marketed as Sparkle silver polish. The silver polish sells for $6.00 per jar.

This further processing requires one-fourth pound of Grit 337 per jar of silver polish. The additional direct costs involved in the processing of a jar of silver polish are:

Other ingredients $0.53
Direct labor 1.45
Total direct cost $1.98

Overhead costs associated with processing the silver polish are:

Variable manufacturing overhead cost 20% of direct labor cost
Fixed manufacturing overhead cost (per month):
Production supervisor $2,000
Depreciation of mixing equipment $1,330

The production supervisor has no duties other than to oversee production of the silver polish. The mixing equipment is special-purpose equipment acquired specifically to produce the silver polish. Its resale value is negligible and it does not wear out through use.

Direct labor is a variable cost at Come-Clean Corporation.
Advertising costs for the silver polish total $3,000 per month. Variable selling costs associated with the silver polish are 7.4% of sales.
Due to a recent decline in the demand for silver polish, the company is wondering whether its continued production is advisable. The sales manager feels that it would be more profitable to sell all of the Grit 337 as a cleaning powder.

Requirement 1: What is the incremental contribution margin per jar from further processing of Grit 337 into silver polish? (Round your answer to 2 decimal places. Omit the "tiny_mce_markerquot; sign in your response.)

Incremental contribution margin $ ? per jar

Requirement 2: What is the minimum number of jars of silver polish that must be sold each month to justify the continued processing of Grit 337 into silver polish?

Reference no: EM13599654

Questions Cloud

Grocery corporation received 300328 for 250000 11 bonds : grocery corporation received 300328 for 250000 11 bonds issued on january 1 2009 at a market interest rate of 8. the

Georges grandmother promises to give hime 1000 at the end : georges grandmother promises to give hime 1000 at the end of each of the next five years. how much is the money worth

Fedex corporation is the worlds leading : fedex corporation is the worlds leading express-distribution company. in addition to the worlds largest fleet of

The balance in beginning work in process at bing rubber : the balance in beginning work in process at bing rubber company for direct labor was 152300. during the month of march

Come-clean corporation produces a variety of cleaning : come-clean corporation produces a variety of cleaning compounds and solutions for both industrial and household use.

Brown cow dairy uses the aging approach to estimate bad : brown cow dairy uses the aging approach to estimate bad debt expense. the balance of each account receivable is aged on

Assume that ibm leased equipment that was carried at a cost : assume that ibm leased equipment that was carried at a cost of 150000 to sharon swander company. the term of the lease

Prepare a report that shows the effect on the companys : rosiek corporation uses part a55 in one of its products. the companys accounting department reports the following costs

Vasquez corporation is considering investing in two : vasquez corporation is considering investing in two different projects. it could invest in both neither or just one of

User Account

All Pages