Differential Analysis for Further Processing The management of International Aluminum Co. is considering whether to process aluminum ingot further into rolled aluminum. Rolled aluminum can be sold for $2,300 per ton, and ingot can be sold without further processing for $1,150 per ton. Ingot is produced in batches of 88 tons by smelting 540 tons of bauxite, which costs $102 per ton of bauxite. Rolled aluminum will require additional processing costs of $600 per ton of ingot, and 1.25 tons of ingot will produce 1 ton of rolled aluminum. Required: Question Content Area 1. Prepare a differential analysis as of February 5 to determine whether to sell aluminum ingot (Alternative 1) or process further into rolled aluminum (Alternative 2). If required, do not round interim calculations. If required, use a minus sign to indicate a loss. Differential Analysis Sell Ingot (Alt. 1) or Process Further into Rolled Aluminum (Alt. 2) February 5 Line Item Description Sell Ingot (Alternative 1) Process Further into Rolled Aluminum (Alternative 2) Differential Effects (Alternative 2) Revenues, per batch $Revenues, per batch $Revenues, per batch $Revenues, per batch Costs, per batch Costs, per batch Costs, per batch Costs, per batch Profit (loss), per batch $Profit (loss), per batch $Profit (loss), per batch $Profit ( loss), per batch Question Content Area 2. International Aluminum Co. process aluminum ingot further, rather than sell aluminum ingot because profits would be.
Differential Analysis for Further Processing The management of International Aluminum Co. is considering whether to process aluminum ingot further into rolled aluminum. Rolled aluminum can be sold for $2,300 per ton, and ingot can be sold without further processing for $1,150 per ton. Ingot is produced in batches of 88 tons by smelting 540 tons of bauxite, which costs $102 per ton of bauxite. Rolled aluminum will require additional processing costs of $600 per ton of ingot, and 1.25 tons of ingot will produce 1 ton of rolled aluminum. Required: Question Content Area 1. Prepare a differential analysis as of February 5 to determine whether to sell aluminum ingot (Alternative 1) or process further into rolled aluminum (Alternative 2). If required, do not round interim calculations. If required, use a minus sign to indicate a loss. Differential Analysis Sell Ingot (Alt. 1) or Process Further into Rolled Aluminum (Alt. 2) February 5 Line Item Description Sell Ingot (Alternative 1) Process Further into Rolled Aluminum (Alternative 2) Differential Effects (Alternative 2) Revenues, per batch $Revenues, per batch $Revenues, per batch $Revenues, per batch Costs, per batch Costs, per batch Costs, per batch Costs, per batch Profit (loss), per batch $Profit (loss), per batch $Profit (loss), per batch $Profit ( loss), per batch Question Content Area 2. International Aluminum Co. process aluminum ingot further, rather than sell aluminum ingot because profits would be.
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter11: Differential Analysis And Product Pricing
Section: Chapter Questions
Problem 4PB
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Transcribed Image Text:Differential Analysis for Further Processing The management of International Aluminum Co. is considering whether to
process aluminum ingot further into rolled aluminum. Rolled aluminum can be sold for $2,300 per ton, and ingot can be
sold without further processing for $1,150 per ton. Ingot is produced in batches of 88 tons by smelting 540 tons of
bauxite, which costs $102 per ton of bauxite. Rolled aluminum will require additional processing costs of $600 per ton of
ingot, and 1.25 tons of ingot will produce 1 ton of rolled aluminum. Required: Question Content Area 1. Prepare a
differential analysis as of February 5 to determine whether to sell aluminum ingot (Alternative 1) or process further into
rolled aluminum (Alternative 2). If required, do not round interim calculations. If required, use a minus sign to indicate a
loss. Differential Analysis Sell Ingot (Alt. 1) or Process Further into Rolled Aluminum (Alt. 2) February 5 Line Item
Description Sell Ingot (Alternative 1) Process Further into Rolled Aluminum (Alternative 2) Differential Effects (Alternative
2) Revenues, per batch $Revenues, per batch $Revenues, per batch $Revenues, per batch Costs, per batch Costs, per
batch Costs, per batch Costs, per batch Profit (loss), per batch $Profit (loss), per batch $Profit (loss), per batch $Profit (
loss), per batch Question Content Area 2. International Aluminum Co. process aluminum ingot further, rather than sell
aluminum ingot because profits would be.
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