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 $2,100 per ton, and ingot can be sold without further processing for $1,050 per ton. Ingot is produced in batches of 81 tons by smelting 500 tons of bauxite, which costs $108 per ton of bauxite. Rolled aluminum will require additional processing costs of $620 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 Sell Ingot Process Further Line Item Description into Rolled Aluminum Differential Effects (Alternative 1) (Alternative 2) (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 beProduct Pricing and Profit Analysis with Bottleneck Operations Wilmington Chemical Companv produces three products: ethylene. butane, and ester. Each of these products has high demand in the market, and Wilmington Chemical is able to sell as much as it can produce of all three. The reaction operation is a bottleneck in the process and is running at 100% of capacity. Wilmington wants to improve chemical operation profitabilitv. The variable conversion cost is $10 per process hour. The fixed cost is $400,000. In addition, the cost analyst was able to determine the following information about the three products: Ethylene Butane Ester Budgeted units produced 9,000 9,000 9,000 Total process hours per unit 40 4.0 3.0 Reactor hours per unit 15 1.0 0.5 Unit selling price $170 $155 $130 Direct materials cost per unit $115 $80 $85 The reaction operation is part of the total process for each of these three products. Thus. for example, 1.5 of the 4.0 hours reguired to process ethylene is associated with the reactor. ) Required: 1. Determine the unit contribution margin for each product. Contribution Margin Per Unit |:| |:| Ester $|:l 2. Provide an analysis to determine the relative product profitabilities. assuming that the reactor is a bottleneck. Ethyl en e $ $ Butane Contribution Margin Per Reactor Hour Ethylene $|:| Butane $|:| Ester $|:|