100 Differential Analysis for Further ProcessingThe management of International Aluminum Co. is considering whether toprocess aluminum ingot further into rolled aluminum. Rolled aluminum can besold for $2,100 per ton, and ingot can be sold without further processing for$1,050 per ton. Ingot is produced in batches of 84 tons by smelting 510 tons ofbauxite, which costs $100 per ton of bauxite. Rolled aluminum will requireadditional processing costs of $610 per ton of ingot, and 1.25 tons of ingot willproduce 1 ton of rolled aluminum.Required:1. Prepare a differential analysis as of February 5 to determine whether to sellaluminum ingot (Alternative 1) or process further into rolled aluminum(Alternative 2). If required, do not round interim calculations. If required,use a minus sign to indicate a loss.Differential AnalysisSell Ingot (Alt. 1) or Process Further into Rolled Aluminum (Alt. 2)February 5Line ItemDescriptionRevenues, per batchCosts, per batchProfit (loss), perbatchSell Ingot(Alternative1)$Process Furtherinto RolledAluminum(Alternative 2)DifferentialEffects(Alternative 2)2. International Aluminum Co.further, rather than sell aluminum ingot because profits would beprocess aluminum ingot

Differential analysis is a management accounting technique in which we assess only the changes in…

are a differential analysis as of February 5 to determine whether to uminum ingot (Alternative 1) or process further into rolled aluminum ternative 2). If required, do not round interim calculations. If require e a minus sign to indicate a loss. Differential Analysis Sell Ingot (Alt. 1) or Process Further into Rolled Aluminum (Alt. 2 February 5 Line Item Description Sell Ingot (Alternative 1) sts, per batch ofit (loss), per tch evenues, per batch $ 000 Process Further into Rolled Aluminum (Alternative 2) 000 Effects (Alternative Differentia QOQI $ International Aluminum Co. ther, rather than sell aluminum ingot because profits would be process aluminum ing

are a differential analysis as of February 5 to determine whether to uminum ingot (Alternative 1) or process further into rolled aluminum ternative 2). If required, do not round interim calculations. If require e a minus sign to indicate a loss. Differential Analysis Sell Ingot (Alt. 1) or Process Further into Rolled Aluminum (Alt. 2 February 5 Line Item Description Sell Ingot (Alternative 1) sts, per batch ofit (loss), per tch evenues, per batch $ 000 Process Further into Rolled Aluminum (Alternative 2) 000 Effects (Alternative Differentia QOQI $ International Aluminum Co. ther, rather than sell aluminum ingot because profits would be process aluminum ing

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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