The management of Pittsburgh Aluminum Co. is considering whether to process aluminum ingot further into rolled aluminum.

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The management of Pittsburgh Aluminum Co. is considering whether to process aluminum ingot further into rolled aluminum. Rolled aluminum can be sold for $1,800 per ton, and ingot can be sold without further processing for $1,000 per ton. Ingot is produced in batches of 72 tons by smelting 400 tons of bauxite, which costs $90 per ton of bauxite. Rolled aluminum will require additional processing costs of $525 per ton of ingot, and 1.2 tons of ingot will produce 1 ton of rolled aluminum (due to trim losses).
1. Prepare a differential analysis as of December 20, 2012, to determine whether to sell aluminum ingot (Alternative 1) or process further into rolled aluminum (Alternative 2).
2.  Briefly report your recommendations.

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Accounting

ISBN: 9780538475006

24th Edition

Authors: Carl S Warren, James M Reeve, Jonathan Duchac

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