Betram Chemicals Company processes a number of chemical compounds used in producing industrial cleaning products. One compound is decomposed into two chemicals: anderine and dofinol. The cost of processing one batch of compound is $74,500, and the result is 6,100 gallons of anderine and 8,300 gallons of dofinol. Betram Chemicals can sell the anderine at split-off for $11.00 per gallon and the dofinol for $6.90 per gallon. Alternatively, the anderine can be processed further at a cost of $7.30 per gallon (of anderine) into cermine. It takes 4 gallons of anderine for every gallon of cermine. A gallon of cermine sells for $57.

Required:

1. Which alternative is more cost effective and by how much? NOTE: Do NOT round interim calculations and, if required, round your answer to the nearest dollar.

Process it further by $

2. What if the production of anderine into cermine required additional purchasing and quality inspection activity? Every 510 gallons of anderine that undergo further processing require 21 more purchase orders at $11 each and 13 more quality inspection hours at $24 each. Which alternative would be better and by how much? NOTE: Round interim calculations and your final answer to the nearest cent.