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 $ and the result is gallons of anderine and gallons of dofinol. Betram Chemicals can sell the anderine at splitoff for $ per gallon and the dofinol for $ per gallon. Alternatively, the anderine can be processed further at a cost of $ per gallon of anderine into cermine. It takes gallons of anderine for every gallon of cermine. A gallon of cermine sells for $

Required:

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.

Sell at splitoff

by $

What if the production of anderine into cermine required additional purchasing and quality inspection activity? Every gallons of anderine that undergo further processing require more purchase orders at $ each

and  more quality inspection hours at $ each. Which alternative would be better and by how much? 

 

NOTE: Round interim calculations and your final answer to the nearest cent.

Process it further

by $