National Chemical Company manufactures a chemical compound that is sold for $53 per gallon. A newvariant of the chemical has been discovered, and if the basic compound were processed into the newvariant, the selling price would be $81 per gallon. National expects the market for the new compoundvariant to be 8,500 gallons initially and determines that processing costs to refine the basic compoundinto the new variant would be $136, 000. Required: What would be the effect on total profit if Nationalproduces the new compound variant? Should National produce the new compound variant?

The incremental cost analysis is that type of analysis that helps the management in detailing the…

National Chemical Company manufactures a chemical compound that is sold for $53 per gallon. variant of the chemical has been discovered, and if the basic compound were processed into the variant, the selling price would be $81 per gallon. National expects the market for the new compo variant to be 8,500 gallons initially and determines that processing costs to refine the basic comp into the new variant would be $136,000. Required: What would be the effect on total profit if Na produces the new compound variant? Should National produce the new compound variant?

National Chemical Company manufactures a chemical compound that is sold for $53 per gallon. variant of the chemical has been discovered, and if the basic compound were processed into the variant, the selling price would be $81 per gallon. National expects the market for the new compo variant to be 8,500 gallons initially and determines that processing costs to refine the basic comp into the new variant would be $136,000. Required: What would be the effect on total profit if Na produces the new compound variant? Should National produce the new compound variant?

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter19: Capital Investment

Section: Chapter Questions

Problem 31P: Jonfran Company manufactures three different models of paper shredders including the waste...

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National Chemical Company manufactures a chemical compound that is sold for $59 per gallon. A new variant of the chemical has been discovered, and if the basic compound were processed into the new variant, the selling price would be $84 per gallon. National expects the market for the new compound variant to be 8,400 gallons initially and determines that processing costs to refine the basic compound into the new variant would be $159,600. Required: a. What would be the effect on total profit if National produces the new compound variant? b. Should National produce the new compound variant? Complete this question by entering your answers in the tabs below. Required B What would be the effect on total profit if National produces the new compound variant? if National produces the new compound, profit will Required A increase Required A Required B >
National Chemical Company manufactures a chemical compound that is sold for $53 per gallon. A new variant of the chemical has been discovered, and if the basic compound were processed into the new variant, the selling price would be $87 per gallon. National expects the market for the new compound variant to be 8,700 gallons initially and determines that processing costs to refine the basic compound into the new variant would be $174,000. Required: a. What would be the effect on total profit if National produces the new compound variant? b. Should National produce the new compound variant? Complete this question by entering your answers in the tabs below. Required A Required B What would be the effect on total profit if National produces the new compound variant? If National produces the new compound, profit will by
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Delaware Chemicals is considering the installation of a computer process control system in one of its processing plants. This plant is used about 40% of the time, or 3,500 operating hours per year, to produce a proprietary demulsification chemical; during the remaining 60% of the time, it is used to produce other specialty chemicals. The annual production of the demulsification chemical amounts to 30,000 kilograms per year, and it sells for $15 per kilogram. The proposed computer process control system will cost $65,000 and is expected to provide specific benefits in the production of the demulsification chemical as follows: First, the selling price of the product could be increased by $2 per kilogram because the product would be of higher purity, which translates into better demulsification performance. Second, production volumes would increase by 4,000 kilograms per year as a result of higher reaction yields, without any increase in requirements for raw material quantities or…
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Delaware Chemicals is considering the installation of a computer process control system in one of its processing plants. This plant is used about 40% of the time, or 3,500 operating hours per year, to produce a proprietary demulsification chemical; during the remaining 60% of the time, it is used to produce other specialty chemicals. The annual production of the demulsification chemical amounts to 30,000 kilograms per year, and it sells for $15 per kilogram. The proposed computer process control system will cost $65,000 and is expected to provide specific benefits in the production of the demulsification chemical as follows: First, the selling price of the product could be increased by $2 per kilogram because the product would be of higher purity, which translates into better demulsification performance. Second, production volumes would increase by 4,000 kilograms per year as a result of higher reaction yields, without any increase in requirements for raw material quantities or…