Chapter 7_Excell Template_Problems 3&5.xlsx - P7-3A...

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P7-3A Determine if product should be sold or processed further.Thompson Industrial Products Inc. (TIPI) is a diversified industrial-cleaner processing company.produces two products: a table cleaner and a floor cleaner from a common set of chemical inputounces of chemical input are processed at a cost of $210,000 into 600,000 ounces of floor cleancleaner. The floor cleaner has no market value until it is converted into a polish with the trade naprocessing costs for this conversion amount to $240,000.FloorShine sells at $20 per 30-ounce bottle. The table cleaner can be sold for $17 per 25-oucleaner can be converted into two other products by adding 300,000 ounces of another compouof table cleaner. This joint process will yield 300,000 ounces each of table stain remover (TSR) additional processing costs for this process amounts to $100,000. Both table products can be sThe company decided not to process the table cleaner into TSR and TP based on the followiProcess FurtherTableTable StainTableCleanerRemover (TSR)Polish (TP)Production in ounces300,000300,000300,000Revenue$204,000$168,000$168,000Costs:CDG costs70000*52,50052,500TCP costs050,00050,000Total costs70,000102,500102,500Weekly gross profit$134,000$65,500$65,500*If table cleaner is not processed further, it is allocated 1/3 of the $210,000 of CDG cost, wtotal physical output.** If table cleaner is processed further, total physical output is 1,200,000 ounces. TSR an50% of the total physical output and are each allocated 25% of the CDG cost.Instructions(a)Determine if management made the correct decision to not process the table cleaner furth(1) Calculate the company's total weekly gross profit assuming the table cleaner is not pr(2) Calculate the company's total weekly gross profit assuming the table cleaner is proces(3) Compare the resulting net incomes and comment on management's decision.(b)

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