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P 8-29: Palabora Mining Mining owns and operates a copper mine. des producing copper, the mine also produces magnetite, vermiculite, and titanium dioxide. To extract
P 8-29: Palabora Mining Mining owns and operates a copper mine. des producing copper, the mine also produces magnetite, vermiculite, and titanium dioxide. To extract the ore and to separate the four minerals (copper, magnetite, vermiculite, and dioxide) costs $680,000 per batch and unprocessed copper, tons of unprocessed magnetite, 1.600 tons of unprocessed vermiculite, and of unprocessed titanium dioxide. Each batch produced yields the same proportions of the four minerals and the proportions cannot be varied by changing mining operations. The S cost per batch consists of the direct, out-of-pocket costs to mine and separate the four minerals. Each unprocessed mineral can be sold unprocessed or further more refined product. four and sold as a the price per The following table summarizes for each of the minerals the and the additional ton if sold after further processing, the price per ton if sold unprocessed, costs to process further. In other words, all 175 tons of copper can be without further processing sold for $6,200 per ton or it can be sold for $8,000 per ton if further processed. But to process the entire 175 tons of copper that are in the batch costs an additional $383,000. Price/Ton after Price/Ton without Additional Costs to Tons per Batch Further Processing Further Processing Process Further Copper 175 $8,000 $6,200 3,000 Magnetite 2,400 $200 $145 $130,000 1,600 Vermiculite $325 $280 $220,000 320 $2,400 Titanium dioxide $1,600 $180,000 Required: a. Which of the four minerals should be sold unprocessed and which should be processed fur ther and then sold? Provide detailed calculations supporting your recommendations
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