Floorshine 400000 table stain remover 300000 25 x 14

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FloorShine $400,000 Table Stain Remover (300,000 ÷ 25) X $14 168,000 Table Polish (300,000 ÷ 25) X $14 168,000 Total revenue $736,000 Costs: CDG 210,000 Additional costs of FloorShine 240,000 TCP 100,000 Total costs 550,000 Gross profit $186,000
(3) If the table cleaner is processed further overall company profits will be $20,000 higher. Therefore, management made the wrong decision by choosing to not process table cleaner further. (b) Don’t Process Table Cleaner Further Process Table Cleaner Further Net Income Increase (Decrease) Incremental revenue $216,000 $336,000 $120,000 Incremental costs 0 100,000 (100,000 ) Totals $216,000 $236,000 $ 20,000 When trying to decide if the table cleaner should be processed further into TSR and TP, only the relevant data need be considered. All of the costs that occurred prior to the creation of the table cleaner are sunk costs and can be ignored. The decision should be made by comparing the incremental revenue from further processing to the incremental costs.

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