Requirement 1. Prepare an analysis to show whether it is more profitable for PMC to continue selling raw bulk coal or to process it further through sizing and cleaning. (Ignore coal fines in your analysis.) Begin by calculating the incremental sales revenue, then incremental costs and finally incremental gain or loss. (Do not round until the final answer for each cost calculation, then round to the nearest dollar. Use parentheses or a minus sign for losses.) Incremental sales revenues: Sales revenue after further processing Sales revenue from bulk raw coal Incremental sales revenue Incremental costs: Direct labor Supervisory personnel Heavy equipment costs Sizing and cleaning Outbound rail freight Incremental costs $ 345,450,000 315,000,000 30,450,000 780,000 190,000 300,000 39,900,000 41,125,000 82,295,000 $(51 845.000) Incremental gain(loss) The analysis indicates that it would be more profitable to continue to sell bulk raw coal without further processing. Requirement 2. How would your analysis be affected if the cost of producing raw coal could be held down to $19 per ton? The cost of producing the raw coal is irrelevant to the decision to process further or not. This will not affect the analysis determined in requirement 1. Requirement 3. Now consider the potential value of the coal fines and prepare an addendum that shows how their value affects the results of your analysis prepared in requirement 1. Begin by calculating the incremental income at both the minimum and maximum income levels. Incremental income per ton Tons Incremental income Minimum 12 $ (51,845,000) 472,500 Maximum 20 472,500 Enter any number in the edit fields and then click Check Answer. fl Data Table 1 Selling price of raw coal 2 Cost of producing raw coal 3 Selling price of sized and cleaned coal 4 Annual raw coal output 5 Percentage of material weight loss in sizing/cleaning coal Print B $30 per ton $22 per ton $35 per ton 10,500,000 tons 6 % 6 7 Direct labor 8 Supervisory personnel 9 Heavy equipment: rental, operating, maintenance costs 10 Contract sizing and cleaning 11 Outbound rail freight 12 Percentage of sizing/cleaning waste that can be salvaged for coal fines 75% 13 Range of costs per ton for preparing coal fine for sale $3 14 Range of coal fine selling prices (per ton) $15 Done Incremental Costs of Sizing & Cleaning Processes $780,000 per year $190,000 per year $25,000 per month $3.80 per ton of raw coal $250 per 60-ton rail car I $ $ Xtis ally 6 26