Differential Analysis for Further Processing The management of International Aluminum Co. is considering whether to proc

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Differential Analysis For Further Processing The Management Of International Aluminum Co Is Considering Whether To Proc 1 (38.47 KiB) Viewed 60 times

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 $2,200 per ton, and ingot can be sold without further processing for $1,100 per ton. Ingot is produced in batches of 87 tons by smelting 530 tons of bauxite, which costs $108 per ton of bauxite. Rolled aluminum will require additional processing costs of $630 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 Process Further into Sell Ingot (Alternative 1) Differential Effects (Alternative 2) Rolled Aluminum (Alternative 2) Revenues, per batch Costs, per batch Profit (loss), per batch $ 2. International Aluminum Co. process aluminum ingot further, rather than sell aluminum ingot because profits would be