21-3A-8.xlsx - 21-3A Table Cleaner 300,000 Floor Cleaner...

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Unformatted text preview: 21-3A Table Cleaner 300,000 Floor Cleaner Total Chemical Input 600,000 900,000 Table Stain Remover 300,000 Table Polish Total 300,000 600,000 a 1 Table Cleaner Not Processed Further Sales: FloorShine Table Cleaner Total Revenue $ 400,000 $ 204,000 604,000 Costs CDG 210,000 Additional costs of FloorShine Total costs Gross profit 2 Table Cleaner Processed Further Sales FloorShine Table Stain Remover 240,000 $ $ Table Polish Total Revenue 400,000 168,000 168,000 736,000 Costs: CDG Additional costs of FloorShine 210,000 240,000 TCP Total costs Gross profit 450,000 154,000 100,000 $ 550,000 186,000 3 If the table cleaner is processed further overall company profits will be $20,000 higher. Therefo management made the wrong decision by choosing to not process table cleaner further. If the table cleaner is processed further overall company profits will be $20,000 higher. Therefo management made the wrong decision by choosing to not process table cleaner further. Don’t Process Table Cleaner Further b Incremental revenue $ 204,000 Incremental costs Totals $ 204,000 When trying to decide if the table cleaner should be processed further into TSR and TP, only th considered. All of the costs that occurred prior to the creation of the table cleaner are sunk cost The decision should be made by comparing the incremental revenue from further processing to Ounce per bottle Selling Price per bottle 25 12,000 17 30 20,000 20 Ounce per bottle Selling Price per bottle 25 12,000 14 25 12,000 14 weekly profit T revenue ounces 204,000 300,000 cost cdg tcp weekly gross profit rofits will be $20,000 higher. Therefore, process table cleaner further. 70,000 134,000 rofits will be $20,000 higher. Therefore, process table cleaner further. Process Table Cleaner Net Income Increase Further (Decrease) $ 336,000 $ 132,000 $ 100,000 436,000 $ 100,000 232,000 sed further into TSR and TP, only the relevant data need be tion of the table cleaner are sunk costs and can be ignored. al revenue from further processing to the incremental costs. weekly profit TSR & TP 336,000 600,000 105,000 100,000 131,000 ...
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