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 $2,200 per ton, and ingot can be sold without further processing for $1,100 per ton. Ingot is produced in batches of 85 tons by smelting 540 tons of bauxite, which costs $104 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 e2e7fc04cfff029_1	$fill in the blank e2e7fc04cfff029_2	$fill in the blank e2e7fc04cfff029_3
Costs, per batch	fill in the blank e2e7fc04cfff029_4	fill in the blank e2e7fc04cfff029_5	fill in the blank e2e7fc04cfff029_6
Profit (loss), per batch	$fill in the blank e2e7fc04cfff029_7	$fill in the blank e2e7fc04cfff029_8	$fill in the blank e2e7fc04cfff029_9