Question
Enviro-Chem Company processes a number of chemical compounds used in producing reagents for the environmental testing industry. One compound is decomposed into two chemicals: guarine
Enviro-Chem Company processes a number of chemical compounds used in producing reagents for the environmental testing industry. One compound is decomposed into two chemicals: guarine and petroline. The cost of processing one batch of compound is $82,000, and the result is 4,000 gallons of guarine and 8,000 gallons of petroline. Enviro-Chem Company can sell the guarine at split-off for $15 per gallon and the petroline for $9 per gallon. Alternatively, the guarine can be processed further at a cost of $5 per gallon (of guarine) into rhydrolite. It takes 4 gallons of guarine for every gallon of rhydrolite. A gallon of rhydrolite sells for $75. If the guarine is sold at split-off, Enviro-Chem will earn sales revenue of $fill in the blank b8acba0ad067fc5_1. If the guarine is processed further into rhydrolite, Enviro-Chem will earn a net post-split-off amount of If the guarine is processed further into rhydrolite, Enviro-Chem will earn a net post-split-off amount of $fill in the blank b8acba0ad067fc5_2. It is better for Enviro-Chem Company to sell the guarine at split-off .
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