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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

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 $2,300 per ton, and ingot can be sold without further processing for $1,150 per ton. Ingot is produced in batches of 84 tons by smelting 500 tons of bauxite, which costs $103 per ton of bauxite. Rolled aluminum will require additional processing costs of $600 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 (Alternative 1) Process Further into Rolled Aluminum (Alternative 2) Differential Effects (Alternative 2)
Revenues, per batch $fill in the blank 4ff34ff9affcfe8_1 $fill in the blank 4ff34ff9affcfe8_2 $fill in the blank 4ff34ff9affcfe8_3
Costs, per batch fill in the blank 4ff34ff9affcfe8_4 fill in the blank 4ff34ff9affcfe8_5 fill in the blank 4ff34ff9affcfe8_6
Profit (loss), per batch $fill in the blank 4ff34ff9affcfe8_7 $fill in the blank 4ff34ff9affcfe8_8 $fill in the blank 4ff34ff9affcfe8_9

2. International Aluminum Co. process aluminum ingot further, rather than sell aluminum ingot because profits would be .

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