Problem 7-3A (Part Level Submission)Thompson Industrial Products Inc. (TIPI) is a diversified industrial-cleaner processing company. The company’s Dargan plant produces two products: a table cleaner and a floor cleaner from a common set of chemical inputs (CDG). Each week, 900,000 ounces of chemical input are processed at a cost of $210,000 into 600,000 ounces of floor cleaner and 300,000 ounces of table cleaner. The floor cleaner has no market value until it is converted into a polish with the trade name FloorShine. The additional processing 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-ounce bottle. However, the table cleaner can be converted into two other products by adding 300,000 ounces of another compound (TCP) to the 300,000 ounces of table cleaner. This joint process will yield 300,000 ounces each of table stain remover (TSR) and table polish (TP). The additional processing costs for this process amount to $100,000. Both table products can be sold for $14 per 25-ounce bottle.The company decided not to process the table cleaner into TSR and TP based on the following analysis. Process Further TableCleaner Table StainRemover (TSR) TablePolish (TP) Total Production in ounces 300,000 300,000 300,000 Revenues $204,000 $168,000 $168,000 $336,000 Costs: CDG costs 70,000* 52,500 52,500 105,000** TCP costs 0 50,000 50,000 100,000 Total costs 70,000 102,500 102,500 205,000 Weekly gross profit $134,000 $65,500 $65,500 $131,000 *If table cleaner is not processed further, it is allocated 1/3 of the $210,000 of CDG cost, which is equal to 1/3 of the total physical output.**If table cleaner is processed further, total physical output is 1,200,000 ounces. TSR and TP combined account for 50% of the total physical output and are each allocated 25% of the CDG cost. (a)Determine if management made the correct decision to not process the table cleaner further by doing the following.(1) Calculate the company’s total weekly gross profit assuming the table cleaner is not processed further.Total weekly gross profit $ (2) Calculate the company’s total weekly gross profit assuming the table cleaner is processed further.Total weekly gross profit $ (3) Compare the resulting net incomes and comment on management’s decision.Management made the (wrong/right) decision by choosing to not process table cleaner further P20-3A Determine if product should be sold or processed further.Thompson Industrial Products Inc. (TIPI) is a diversified industrial-cleaner processing company. The company's Dargar plantproduces two products: a table cleaner and a floor cleaner from a common set of chemical inputs (CDG). Each week 900,000ounces of chemical input are processed at a cost of $210,000 into 600,000 ounces of floor cleaner and 300,000 ounces of tablecleaner. The floor cleaner has no market value until it is converted into a polish with the trade name FloorShine. The additionalprocessing 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-ounce bottle. However, the tablecleaner can be converted into two other products by adding 300,000 ounces of another compound (TCP) to the 300,000 ouncesof table cleaner. This joint process will yield 300,000 ounces each of table stain remover (TSR) and table polish (TP). Theadditional processing costs for this process amounts to $100,000. Both table products can be sold for $14 per $25-ounce bottle.The company decided not to process the table cleaner into TSR and TP based on the following analysis.Process FurtherTableTable StainTableRemover (TSR)300,000$168,000Polish (TP)300,000$168.000TotalCleaner300,000$204,000Production in ouncesRevenue$336,000Costs:52,50050,000105,000100,000CDG costs70000*52,50050,000**TCP costs Costs:52,50050,000102,500$65,50052,50050,000102,500$65,500105,000100,000205,000$131,000CDG costs70000***TCP costs70,000$134,000Total costsWeekly gross profit*If table cleaner is not processed further, it is allocated 1/3 of the $210,000 of CDG cost, which is equal to 1/3 of thetotal physical output.** If table cleaner is processed further, total physical output is 1,200,000 ounces. TSR and TP combined account for50% 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 further by doing the following.(1) Calculate the company's total weekly gross profit assuming the table cleaner is not processed further.(2) Calculate the company's total weekly gross profit assuming the table cleaner is processed further.(3) Compare the resulting net incomes and comment on management's decision.(b) Compare the resulting net incomes and comment on management's decision.NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a "?".

Part a) If Not Further Processed Particulars Amount Amount Sales Floor Shine…

Thompson Industrial Products Inc. (TIPI) is a diversified industrial-cleaner processing company. The company’s Dargan plant produces two products: a table cleaner and a floor cleaner from a common set of chemical inputs (CDG). Each week, 900,000 ounces of chemical input are processed at a cost of $210,000 into 600,000 ounces of floor cleaner and 300,000 ounces of table cleaner. The floor cleaner has no market value until it is converted into a polish with the trade name FloorShine. The additional processing 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-ounce bottle. However, the table cleaner can be converted into two other products by adding 300,000 ounces of another compound (TCP) to the 300,000 ounces of table cleaner. This joint process will yield 300,000 ounces each of table stain remover (TSR) and table polish (TP). The additional processing costs for this process amount to $100,000. Both table products can be sold for $14 per 25-ounce bottle. The company decided not to process the table cleaner into TSR and TP based on the following analysis. Process Further Table Cleaner Table Stain Remover (TSR) Table Polish (TP) Total Production in ounces 300,000 300,000 300,000 Revenues $204,000 $168,000 $168,000 $336,000 Costs: CDG costs 70,000 * 52,500 52,500 105,000 ** TCP costs 0 50,000 50,000 100,000 Total costs 70,000 102,500 102,500 205,000 Weekly gross profit $134,000 $65,500 $65,500 $131,000 *If table cleaner is not processed further, it is allocated 1/3 of the $210,000 of CDG cost, which is equal to 1/3 of the total physical output. **If table cleaner is processed further, total physical output is 1,200,000 ounces. TSR and TP combined account for 50% of the total physical output and are each allocated 25% of the CDG cost. (a) Determine if management made the correct decision to not process the table cleaner further by doing the following. (1) Calculate the company’s total weekly gross profit assuming the table cleaner is not processed further. Total weekly gross profit $ (2) Calculate the company’s total weekly gross profit assuming the table cleaner is processed further. Total weekly gross profit $ (3) Compare the resulting net incomes and comment on management’s decision. Management made the (wrong/right) decision by choosing to not process table cleaner further