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p6-3b - Name Date Instructor Course Managerial Accounting...

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FileName: 2925444ddfc9d64fd0cd3c7d0bd7f7ea6fb99bfb.xls, Tab: Problem P6-3B, Page 1 of 2, 12/28/2011, 19:02:02 Name: Date: Instructor: Course: produces two products: a glass cleaner and a metal cleaner from a common set of chemical inputs (TLC). Each week 1,000,000 ounces of chemical input are processed at a cost of $200,000 into 750,000 ounces of metal cleaner and 250,000 ounces of glass cleaner. The metal cleaner has no market value unit it is converted into a polish with the trade name MetalShine. The additional processing costs for this conversion amount to $270,000 MetalShine sells at $15 per 25 ounce bottle. The glass cleaner can be sold for $24 per 25 ounce bottle. However, the glass cleaner can be converted into two other products by adding 250,000 ounces of another compound (MST) to the 250,000 ounces of glass cleaner. This joint process will yield 250,000 ounces each of plastic cleaner (PC) and plastic polish (PP). The additional processing costs for this process amount to $140,000 Both plastic products can be sold for $20 per 25 ounce bottle. The company decided not to process the glass cleaner into PC and PP based on the following analysis: Further Process Total Product in ounces (250,000) (250,000) (250,000) Revenue $240,000 $200,000 $200,000 $400,000 Costs: TLC costs 50,000 40,000 40,000 80,000 MST costs 0 70,000 70,000 140,000 Total costs 50,000 110,000 110,000 220,000 Weekly gross profit $190,000 $90,000 $90,000 $180,000 If glass cleaner is not processed further it is allocated 0.25
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