Palabora Mining owns and operates a copper mine. Besides producing copper, the mine also produces magnetite, vermiculite, and titanium dioxide. To extract the ore and to separate the four minerals (copper, magnetite, vermiculite, and titanium dioxide) costs $680,000 per batch and yields 175 tons of unprocessed copper, 2,400 tons of unprocessed magnetite, 1,600 tons of unprocessed vermiculite, and 320 tons of unprocessed titanium dioxide. Each batch produced yields the same proportions of the four minerals and the proportions cannot be varied by changing mining operations. The $680,000 cost per batch consists of the direct, out-of-pocket costs to mine and separate the four minerals.
Each unprocessed mineral can be sold unprocessed or processed further and sold as a more refined product. The following table summarizes for each of the four minerals the tons per batch, the price per ton if sold after further processing, the price per ton if sold unprocessed, and the additional costs to process further. In other words, all 175 tons of copper can be sold without further processing for $6,200 per ton or it can be sold for $8,000 per ton if further processed. But to process the entire 175 tons of copper that are in the batch costs an additional $383,000.

Required:
a. Which of the four minerals should be sold unprocessed and which should be processed further and then sold? Provide detailed calculations supporting your recommendations.
b. Based on your decisions in part (a), should Palabora Mining continue to produce batches of the four minerals if each batch costs $680,000? Provide detailed calculations supporting your recommendations.
c. Palabora Mining allocates the $680,000 batch cost to the four minerals based on tons of each mineral in the batch. Prepare a table that allocates the $680,000 batch cost to the four minerals based on tons of each mineral in the batch and the profits (revenues less any costs to process further if the mineral is processed further less allocated batch cost) of each mineral.
d. Which mineral is the most profitable, and which is the least profitable based on your analysis in part (e)?
e. Based on your analyses in parts (a) through (d), what advice would you give to the managers of Palabora Mining regarding processing of each of the four minerals and the current method described in part (c) used to allocate the $680,000 batch cost?

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Price/Ton after Further Processing Price/Ton without Further Processing $6,200 $145 Additional Costs to Process Further Tons per Batch 175 2,400 1,600 320 Copper Magnetite Vermiculite $8,000 $200 $383,000 $130,000 $325 $280 $1,600 $220,000 Titanium dioxide $2,400 $180,000