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 $2.40 a pound to
make and sells for $3.60 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 $5.90 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
$2.20 per jar. Variable selling costs are $0.30 per jar. If the
decision were made to cease production of the silver polish, $9,300
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.)
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