Question
DP Mining Company mines an iron ore called Alpha. During the month of August, 405,000 tons of Alpha were mined and processed at a cost
DP Mining Company mines an iron ore called Alpha. During the month of August, 405,000 tons of Alpha were mined and processed at a cost of $745,000. As the Alpha ore is mined, it is processed into Delta and Pi, where 60% of the Alpha output becomes Delta and 40% becomes Pi. Each product can be sold as is or processed into the refined products Super Delta and Precision Pi. Selling prices for these products are as follows:
Delta | Super Delta | Pi | Precision Pi | |||||||||
Selling price | $ | 17 | /ton | $ | 21 | /ton | $ | 22 | /ton | $ | 29 | /ton |
Processing costs to refine Delta into Super Delta are $3,159,000; processing costs to refine Pi into Precision Pi are $486,000.
What is the maximum profit that ADP Mining Company can expect to earn from the production of the 405,000 tons of Alpha?
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