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 90 tons by smelting 540 tons of bauxite, which costs $103 per ton of bauxite. Rolled aluminum will require additional processing costs of $610 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 AnalysisSell Ingot (Alt. 1) or Process Further into Rolled Aluminum (Alt. 2)February 5 Sell Ingot (Alternative 1) Process Further into Rolled Aluminum (Alternative 2) Differential Effects (Alternative 2) Revenues, per batch $fill in the blank 94f99d09802206a_1 $fill in the blank 94f99d09802206a_2 $fill in the blank 94f99d09802206a_3 Costs, per batch fill in the blank 94f99d09802206a_4 fill in the blank 94f99d09802206a_5 fill in the blank 94f99d09802206a_6 Profit (loss), per batch $fill in the blank 94f99d09802206a_7 $fill in the blank 94f99d09802206a_8 $fill in the blank 94f99d09802206a_9 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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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 AnalysisSell Ingot (Alt. 1) or Process Further into Rolled Aluminum (Alt. 2)February 5

	Sell Ingot (Alternative 1)	Process Further into Rolled Aluminum (Alternative 2)	Differential Effects (Alternative 2)
Revenues, per batch	$fill in the blank 94f99d09802206a_1	$fill in the blank 94f99d09802206a_2	$fill in the blank 94f99d09802206a_3
Costs, per batch	fill in the blank 94f99d09802206a_4	fill in the blank 94f99d09802206a_5	fill in the blank 94f99d09802206a_6
Profit (loss), per batch	$fill in the blank 94f99d09802206a_7	$fill in the blank 94f99d09802206a_8	$fill in the blank 94f99d09802206a_9

Question Content Area

2. International Aluminum Co.

process aluminum ingot further, rather than sell aluminum ingot because profits would be

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Decision to Sell before or after additional processing

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