Reference no: EM133185194
Question - 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 $1.60 a pound to make, and it has a selling price of $7.60 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 $5.00 per jar.
This further processing requires one-fourth pound of Grit 337 per jar of silver polish. The additional direct variable costs involved in the processing of a jar of silver polish are:
Other ingredients $0.55
Direct labor 1.36
Total direct cost $1.91
Overhead costs associated with processing the silver polish are:
Variable manufacturing overhead cost 25 % of direct labor cost
Fixed manufacturing overhead cost (per month)
Production supervisor $3,100
Depreciation of mixing equipment $1,500
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. It can produce up to 3,000 jars of polish per month. Its resale value is negligible and it does not wear out through use.
Advertising costs for the silver polish total $2,900 per month. Variable selling costs associated with the silver polish are 5% 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.
Required -
1. How much incremental revenue does the company earn per jar of polish by further processing Grit 337 rather than selling it as a cleaning powder?
2. How much incremental contribution margin does the company earn per jar of polish by further processing Grit 337 rather than selling it as a cleaning powder?
3. How many jars of silver polish must be sold each month to exactly offset the avoidable fixed costs incurred to produce and sell the polish?
4. If the company sells 7,500 jars of polish, what is the financial advantage (disadvantage) of choosing to further process Grit 337 rather than selling is as a cleaning powder?
5. If the company sells 11,900 jars of polish, what is the financial advantage (disadvantage) of choosing to further process Grit 337 rather than selling is as a cleaning powder?
What is the estimated cost of missing inventory
: Chuchu suspects some of the inventory may have been taken by a new employee. What is the estimated cost of missing inventory
|
How much is the gain from sale of patent
: After the legal action was completed, the entity sold the patent to the plaintiff for P740,000. How much is the gain from sale of patent in 2024
|
How much is the carrying value of the investment on december
: Question - On January 1, 2021, Herskin Company acquired a bond investment from Ryx for P1,079,854, How much is the carrying value of the investment on December
|
How much is the monthly payment for the mortgage
: Question - CHALLENGE PROBLEM - Gary Penn owns a $150,000 brick home. How much is the monthly payment for the mortgage
|
How much incremental revenue does the company earn per jar
: How much incremental revenue does the company earn per jar of polish by further processing Grit 337 rather than selling it as a cleaning powder
|
What is the total interest paid
: Question - What is the total interest paid over 30 years on a 150, 000 mortgage loan with an annual interest rate of 5% percent
|
What is your solution and recommendation for the board
: Wishart Hills Ltd, generated a tax loss for tax purposes for financial year ending 2026. What is your solution and recommendation for the Board
|
Compute predetermined overhead rate for variable overhead
: Compute the predetermined overhead rate for (1) variable overhead and (2) fixed overhead using each of the following cost drivers
|
How much will they have to set aside at the end of each year
: He is ten years now and will start tertiary education in 9 years. How much will they have to set aside at the end of each year to have R80 000 in 9 years
|