Exercise 14-40 Joint Products; Relevant Costs; Cost-Volume-Profit Analysis (LO 14-4, 14-6) Zytel 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 $2.00 a pound to make and sells for $3.20 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 $4.40 per jar. This further processing requires 1/4 pound of Grit 337 per jar. Costs of other ingredients, labor, and variable overhead associated with this further processing amount to $2.30 per jar. Variable selling costs are $0.60 per jar. If the decision were made to cease production of the silver polish, $9,500 of Mixing Department fixed costs could be avoided. Zytel has limited production capacity for Grit 337, but unlimited demand for the cleaning powder. Required: Calculate the minimum number of jars of silver polish that would have to be sold to justify further processing of Grit 337. (Round your intermediate calculations to 2 decimal places and final answer to the nearest whole number.) Answer is complete but not entirely correct. Minimum number of jars 1,357
Exercise 14-40 Joint Products; Relevant Costs; Cost-Volume-Profit Analysis (LO 14-4, 14-6) Zytel 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 $2.00 a pound to make and sells for $3.20 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 $4.40 per jar. This further processing requires 1/4 pound of Grit 337 per jar. Costs of other ingredients, labor, and variable overhead associated with this further processing amount to $2.30 per jar. Variable selling costs are $0.60 per jar. If the decision were made to cease production of the silver polish, $9,500 of Mixing Department fixed costs could be avoided. Zytel has limited production capacity for Grit 337, but unlimited demand for the cleaning powder. Required: Calculate the minimum number of jars of silver polish that would have to be sold to justify further processing of Grit 337. (Round your intermediate calculations to 2 decimal places and final answer to the nearest whole number.) Answer is complete but not entirely correct. Minimum number of jars 1,357
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:Exercise 14-40 Joint Products; Relevant Costs; Cost-Volume-Profit Analysis (LO 14-4, 14-6)
Zytel 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 $2.00 a pound to
make and sells for $3.20 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
$4.40 per jar. This further processing requires 1/4 pound of Grit 337 per jar. Costs of other ingredients, labor, and variable overhead
associated with this further processing amount to $2.30 per jar. Variable selling costs are $0.60 per jar. If the decision were made to
cease production of the silver polish, $9,500 of Mixing Department fixed costs could be avoided. Zytel has limited production capacity
for Grit 337, but unlimited demand for the cleaning powder.
Required:
Calculate the minimum number of jars of silver polish that would have to be sold to justify further processing of Grit 337. (Round your
intermediate calculations to 2 decimal places and final answer to the nearest whole number.)
Answer is complete but not entirely correct.
Minimum number of jars
1,357
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