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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
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 $4,120 per ton, and ingot can be sold without further processing for $2,307.2 per ton. Ingot is produced in batches of 110 tons by smelting 275 tons of bauxite, which costs $576.8 per ton. Rolled aluminum will require additional processing costs of $865.2 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 377,666.67 X 253,792 Differential revenue from further processing per batch: Revenue from sale of rolled aluminum Revenue from sale of aluminum ingot Differential revenue Differential cost per batch: Additional cost of processing rolled aluminum 123,874.67 x 95,172 Differential gain from further processing aluminum ingot, per batch 28,702.67
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