Differential Analysis for Further Processing The management of International Aluminum Co. is considering whether to process aluminum ingot further into rolled aluminum. Rolled aluminum can be- sold for $2,100 per ton, and ingot can be sold without further nrocessing for $1,050 per ton. Ingot is produced in batches of 89 tons by smelting 550 tons of bauxite, which costs $110 per ton of bauxite. Rolled aluminum will require additional processing costs of $610 per ton of ingot, and 1.25 tons of ingot will produce 1 ton of rolled aluminum. Required: 1. Prepare a differential analysis as of February 5 to determine whether to sell aluminum 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 Analysis Sell Ingot (Alt. 1) or Process Eurther into Rollod oluumi

Differential Analysis for Further Processing The management of International Aluminum Co. is considering whether to process aluminum ingot further into rolled aluminum. Rolled aluminum can be- sold for $2,100 per ton, and ingot can be sold without further nrocessing for $1,050 per ton. Ingot is produced in batches of 89 tons by smelting 550 tons of bauxite, which costs $110 per ton of bauxite. Rolled aluminum will require additional processing costs of $610 per ton of ingot, and 1.25 tons of ingot will produce 1 ton of rolled aluminum. Required: 1. Prepare a differential analysis as of February 5 to determine whether to sell aluminum 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 Analysis Sell Ingot (Alt. 1) or Process Eurther into Rollod oluumi

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Sell or Process Further Rise N’ Shine Coffee Company produces Columbian coffee in batches of 6,800 pounds. The standard quantity of materials required in the process is 6,800 pounds, which cost $4 per pound. Columbian coffee can be sold without further processing for $8.4 per pound. Columbian coffee can also be processed further to yield Decaf Columbian, which can be sold for $10 per pound. The processing into Decaf Columbian requires additional processing costs of $8,450 per batch. The additional processing will also cause a 6% loss of product due to evaporation. a. Prepare a differential analysis dated October 6 on whether to sell regular Columbian (Alternative 1) or process further into Decaf Columbian (Alternative 2). Differential Analysis Sell Regular Columbian (Alt. 1) or Process Further into Decaf Columbian (Alt. 2) October 6 Sell RegularColumbian(Alternative 1) Process Furtherinto Decaf Columbian(Alternative 2) DifferentialEffect on Income(Alternative 2)…
Saint John Mining operates several facilities. At one, a typical batch of an ore, Pryex, run through the processing plant yields three products: PX-10, PX-20, and PX-30. At the split-off point, the intermediate products cannot be sold without further processing. A typical batch of PX-10 sells for $110,000 after incurring additional processing costs of $20,000. PX-20 can be sold for $170,000 after additional processing costs of $44,000, and the PX-30 sells for $220,000 but requires additional processing costs of $76,000. The joint costs of processing the Pryex, including the cost of mining, are $240,000 per batch. Required: Use the estimated net realizable value method to allocate the joint processing costs and fill out the following table. PX-10 PX-20 PX-30 Estimated Sales Value at split-off Percent of total sales value at split-off % % % Cost-allocation
A company has a process that results in 980 kilograms of Product X that can be sold for $9 per kilogram. An alternative would be to process Product X further at a cost of $1960 and then sell it for $16 per kilogram. Should management sell Product X now or should Product X be processed further and then sold? Process further; the company will be better off by $4900. Sell now; the company will be better off by $4900. Process further; the company will be better off by $6860. Sell now; the company will be better off by $8820.
Sell or Process Further Abica Coffee Company produces Columbian coffee in batches of 6,500 pounds. The standard quantity of materials required in the process is 6,500 pounds, which cost $6 per pound. Columbian coffee can be sold without further processing for $9 per pound. Columbian coffee can also be processed further to yield Decaf Columbian, which can be sold for $12 per pound. The processing into Decaf Columbian requires additional processing costs of $13,068 per batch. The additional processing also causes a 5% loss of product due to evaporation. a. Prepare a differential analysis dated October 6 on whether to sell regular Columbian (Alternative 1) or process further into Decaf Columbian (Alternative 2). For those boxes in which you must enter subtracted or negative numbers use a minus sign. Differential Analysis Sell Regular Columbian (Alt. 1) or Process Further into Decaf Columbian (Alt. 2) October 6 SellRegularColumbian(Alternative 1) ProcessFurther…
Required information [The following information applies to the questions displayed below.] Illinois Metallurgy Corporation has two divisions. The Fabrication Division transfers partially completed components to the Assembly Division at a predetermined transfer price. The Fabrication Division's standard variable production cost per unit is $550. The division has no excess capacity, and it could sell all of its components to outside buyers at $770 per unit in a perfectly competitive market. Required: 1. Determine a transfer price using the general rule. Transfer price
Product Decisions Under Bottlenecked Operations Youngstown Glass Company manufactures three types of safety plate glass: large, medium, and small. All three products have high demand. Thus, Youngstown Glass is able to sell all the safety glass it can make. The production process includes an autoclave operation, which is a pressurized heat treatment. The autoclave is a production bottleneck. Total fixed costs are $158,000 for the company as a whole. In addition, the following information is available about the three products: Large Medium Small Unit selling price $235 $429 $149 Unit variable cost 185 351 131 Unit contribution margin $ 50 $ 78 $ 18 Autoclave hours per unit 4 6 2 Total process hours per unit 8 12 6 Budgeted units of production 2,400 2,400 2,400 a. Determine the contribution margin by glass type and the total company income from operations for the budgeted units of production. Large Medium Small Total Units…
Product Decisions Under Bottlenecked Operations Youngstown Glass Company manufactures three types of safety plate glass: large, medium, and small. All three products have high demand. Thus, Youngstown Glass is able to sell all the safety glass it can make. The production process includes an autoclave operation, which is a pressurized heat treatment. The autoclave is a production bottleneck. Total fixed costs are $296,000 for the company as a whole. In addition, the following information is available about the three products: Large Medium Small Unit selling price $324 $286 $158 Unit variable cost 255 234 139 Unit contribution margin $ 69 $ 52 $ 19 Autoclave hours per unit 6 4 2 Total process hours per unit 18 8 6 Budgeted units of production 4,700 4,700 4,700 a. Determine the contribution margin by glass type and the total company income from operations for the budgeted units of production. Large Medium Small Total Units…
s
Product Decisions Under Bottlenecked Operations Youngstown Glass Company manufactures three types of safety plate glass: large, medium, and small. All three products have high demand. Thus, Youngstown Glass is able to sell all the safety glass it can make. The production process includes an autoclave operation, which is a pressurized heat treatment. The autoclave is a production bottleneck. Total fixed costs are $177,000 for the company as a whole. In addition, the following information is available about the three products: Large Medium Small Unit selling price $353 $99 $282 Unit variable cost 278 81 248 Unit contribution margin $ 75 $ 18 $ 34 Autoclave hours per unit 6 2 4 Total process hours per unit 18 6 8 Budgeted units of production 3,100 3,100 3,100 a. Determine the contribution margin by glass type and the total company income from operations for the budgeted units of production. Large Medium Small Total Units…
Sell or Process Further Abica Coffee Company produces Columbian coffee in batches of 6,200 pounds. The standard quantity of materials required in the process is 6,200 pounds, which cost $6 per pound. Columbian coffee can be sold without further processing for $9 per pound. Columbian coffee can also be processed further to yield Decaf Columbian, which can be sold for $12 per pound. The processing into Decaf Columbian requires additional processing costs of $12,701 per batch. The additional processing also causes a 5% loss of product due to evaporation. a. Prepare a differential analysis dated October 6 on whether to sell regular Columbian (Alternative 1) or process further into Decaf Columbian (Alternative 2). For those boxes in which you must enter subtracted or negative numbers use a minus sign. Differential Analysis Sell Regular Columbian (Alt. 1) or Process Further into Decaf Columbian (Alt. 2) October 6 SellRegularColumbian(Alternative 1) ProcessFurther…
Sell at Split-Off or Process Further Bozo Inc. manufactures two products from a joint production process. The joint process costs $110,000 and yields 6,000 pounds of LTE compound and 14,000 pounds of HS compound. LTE can be sold at split-off for $55 per pound. HS can be sold at split-off for $11 per pound. A buyer of HS asked Bozo to process HS further into CS compound. If HS were processed further, it would cost $35,700 to turn 14,000 pounds of HS into 4,000 pounds of CS. The CS would sell for $50 per pound. Required: 1. What is the contribution to income from selling the 14,000 pounds of HS at split-off? 2. Conceptual Connection: What is the contribution to income from processing the 14,000 pounds of HS into 4,000 pounds of CS? Should Bozo continue to sell the HS at split-off or process it further into CS? Process it further into CS ✓
Woodruff Company is currently producing a snowmobile that uses five specialized parts. Engineering has proposed replacing these specialized parts with commodity parts, which will cost less and can be purchased in larger order quantities. Current activity capacity and demand (with specialized parts required) and expected activity demand (with only commodity parts required) are provided. Activities Activity Driver ActivityCapacity Current ActivityDemand Expected ActivityDemand Material usage Number of parts 200,000 200,000 200,000 Installing parts Direct labor hours 20,000 20,000 16,000 Purchasing parts Number of orders 7,600 6,498 3,990 Additionally, the following activity cost data are provided: Material usage: $11 per specialized part used; $27 per commodity part; no fixed activity cost. Installing parts: $21 per direct labor hour; no fixed activity cost. Purchasing parts: Four salaried clerks, each earning a $47,000 annual salary; each clerk is capable of processing 1,900…