Differential Analysis Report for Further Processing

The management of Dorsch Aluminum Co. is considering whether to process aluminum ingot further into rolled aluminum. Rolled aluminum can be sold for $4,160 per ton, and ingot can be sold without further processing for $2,329.6 per ton. Ingot is produced in batches of 110 tons by smelting 275 tons of bauxite, which costs $582.4 per ton. Rolled aluminum will require additional processing costs of $873.6 per ton of ingot, and 1.2 tons of ingot will produce 1 ton of rolled aluminum (due to trim losses).

Required:

1. Prepare a report presenting a differential analysis associated with the further processing of aluminum ingot to produce rolled aluminum.

Dorsch Aluminum Co. Proposal to Process Raw Sugar Further

Differential revenue from further processing per batch: