The management of International Aluminum Co. is considering whether to process aluminum ingot further into rolled aluminum. Rolled aluminum can be sold for $2,200 per ton, and ingot can be sold without further processing for $1,100 per ton. Ingot is produced in batches of 80 tons by smelting 520 tons of bauxite, which costs $104 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: 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 Differential Effects (Alternative 2) (Alternative 2) Revenues, per batch $ 88,000 Costs, per batch Profit (loss), per batch

The management of International Aluminum Co. is considering whether to process aluminum ingot further into rolled aluminum. Rolled aluminum can be sold for $2,200 per ton, and ingot can be sold without further processing for $1,100 per ton. Ingot is produced in batches of 80 tons by smelting 520 tons of bauxite, which costs $104 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: 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 Differential Effects (Alternative 2) (Alternative 2) Revenues, per batch $ 88,000 Costs, per batch Profit (loss), per batch

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 3CMA: Aril Industries is a multiproduct company that currently manufactures 30,000 units of Part 730 each...

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The management of International Aluminum Co. is considering whether to process aluminum ingot further into rolled aluminum. Rolled aluminum can be sold for $2,200 per ton, and ingot can be sold without further processing for $1,100 per ton. Ingot is produced in batches of 80 tons by smelting 500 tons of bauxite, which costs $105 per ton of bauxite. Rolled aluminum will require additional processing costs of $620 per ton of ingot, and 1.25 tons of ingot will produce 1 ton of rolled aluminum (due to trim losses). Required: 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). Use a minus sign to indicate subtracted amounts, negative amounts, or a loss.
The management of International Aluminum Co. is considering whether to process aluminum ingot further into rolled aluminum. Rolled aluminum can be sold for $2,500 per ton, and ingot can be sold without further processing for $1,250 per ton. Ingot is produced in batches of 82 tons by smelting 500 tons of bauxite, which costs $102 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: 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…
The management of International Aluminium Co. is considering whether to process aluminum ingot further into rolled aluminium. Rolled aluminium can be sold for $2200 per ton, and ingot can be sold without further processing for $1100 per ton. Ingot is produced in batches of 80 tons by smelting 500 tons of bauxite, which costs $105 per ton of bauxite. Rolled aluminium will require additional processing costs of $620 per ton ingot, and 1.25 tons of ingot will produce 1 ton of rolled aluminium. prepare a differential analysis as of February 5 to determine whether to sell aluminium ingot or process further into rolled aluminium.
Itial Analysis for The management of International Aluminum Co. is considering whether to process aluminum ingot further into rolled aluminum. Rolled aluminum can be sold for $2,200 per ton, and ingot can be sold without further processing for $1,100 per ton. Ingot is produced in batches of 80 tons by smelting 500 tons of bauxite, which costs $105 per ton of bauxite. Rolled aluminum will require additional processing costs of $620 per ton of ingot, and 1.25 tons of ingot will produce 1 ton of rolled aluminum (due to trim losses). Required: 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). 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 Costs, per batch $ $…
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 84 tons by smelting 510 tons of bauxite, which costs $101 per ton of bauxite. Rolled aluminum will require additional processing costs of $620 per ton of ingot, and 1.25 tons of ingot will produce 1 ton of rolled aluminum. Required: 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…
Gunston Processing produces two products, ALT-1 and ALT-2, from a batch using a single raw material, ALT-O. Both products require further processing before they be can be sold. A batch of ALT-1 can be sold for $153,000 after processing costs of $42,000. A batch of ALT-2 can be sold for $241,200 after further processing. The cost of ALT-O is $200,000 for a batch. Using the estimated net realizable value method, a joint cost of $120,000 was allocated to ALT-2 for a batch. Required: Compute the separable processing cost for a batch of ALT-2. Note: Do not round intermediate calculations. Processing cost
Gunston Processing produces two products, ALT-1 and ALT-2, from a batch using a single raw material, ALT-O. Both products require further processing before they be can be sold. A batch of ALT-1 can be sold for $150,000 after processing costs of $30,000. A batch of ALT-2 can be sold for $240,000 after further processing. The cost of ALT-0 is $200,000 for a batch. Using the estimated net realizable value method, a joint cost of $120,000 was allocated to ALT-2 for a batch. Required: Compute the separable processing cost for a batch of ALT-2. Processing cost hs
Smith Chemical has spent $244,000 to refine 73,000 gallons of acetone, which can be sold for $2.40 a gallon. Alternatively, Smith Chemical can process the acetone further. This processing will yield a total of 58,000 gallons of lacquer thinner that can be sold for $3.30 a gallon. The additional processing will cost $0.55 per gallon of lacquer thinner. To sell the lacquer thinner, Smith Chemical must pay shipping of $0.18 a gallon and administrative expenses of $0.10 a gallon on the thinner. Requirements 1. Identify the sunk cost. Is the sunk cost relevant to Smith's decision? Why or why not? 2. Should Smith sell the acetone as is or process it into lacquer thinner? Show the expected net revenue difference between the two alternatives. ..... Requirement 1. Identify the sunk cost. Is the sunk cost relevant to Smith's decision? Why or why not? The is a sunk cost that differ between alternatives of selling as is or processing further. Consequently, this sunk cost of is to the sell or…
Noble Chemical has spent $240,000 to refine 71,000 gallons of acetone, which can be sold for $2.30 a gallon. Alternatively, Noble Chemical can process the acetone further. This processing will yield a total of 59,000 gallons of lacquer thinner that can be sold for $3.20 a gallon. The additional processing will cost $0.85 per gallon of lacquer thinner. To sell the lacquer thinner, Noble Chemical must pay shipping of $0.24 a gallon and administrative expenses of $0.12 a gallon on the thinner. Requirements: 1. Identify the sunk cost. Is the sunk cost relevant to Noble's decision? Why or why not? 2. Should Noblesell the acetone as is or process it into lacquer thinner? Show the expected net revenue difference between the two alternatives.
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) ProcessFurther…
Brandon Machines manufactures a number of products from the same raw material. Joint processing costs total $10,000. Product A could be sold at the cut-off point for $18,000 or it can be further processed at a cost of $9,000 and then sold for $35,000. Brandon should: Further process product A because its incremental revenues will exceed incremental costs by $8,000. Further process product A because its incremental revenues will exceed incremental costs by $26,000. Sell as-is because the incremental loss is $2,000 if processed further. Further process product A because its incremental revenues will exceed incremental costs by $16,000. Further process because the incremental revenues will be $35,000.
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 550 tons of bauxite, which costs $110 per ton of bauxite. Rolled aluminum will require additional processing costs of $650 per ton of ingot, and 1.25 tons of ingot will produce 1 ton of rolled aluminum. Required: 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 Revenues, per batch Costs, per batch Profit (loss), per batch Sell Ingot…