Reference no: EM133141674

Question - F Corporation produces cleaning compounds and solutions for industrial and household use.  While most of its products are processed independently, a few are related.  Grit 337, a coarse cleaning powder with many industrial uses, costs $16 a pound to make and sells for $20 a pound.  A small portion of the annual production of this product is retained for further processing in the Mixing Department, where it is combined with several other ingredients to form a paste, which is marketed as a silver polish selling for $40 per jar. This further processing requires ¼ pound of Grit 337 per jar.

Costs of other ingredients, labor, and variable overhead associated with this further processing amount to $25 per jar.  Variable selling costs are $3 per jar.  If the decision were made to cease production of the silver polish, $56,000 of Mixing Department fixed costs could be avoided.  F Corporation has limited production capacity for Grit 337, but unlimited demand for the cleaning powder.

Required - What is the minimum number of jars of silver polish that would have to be sold to justify further processing of Grit 337?