Exercise 16.12LO 16-2, 16-3Sell or process further? ADP Mining Company mines an iron ore called Alpha. During the month of August, 350,000 tons of Alpha were mined and processed at a cost of $675,000. As the Alpha ore is mined, it is processed into Delta and Pi,where 60% of the Alpha output becomes Delta and 40% becomes Pi. Each product can be sold as is or processed into the refined products Super Delta and Precision Pi. Selling prices for these products are as follows:Selling priceDelta$6/tonSuper Delta$12/tonPi$15/tonPrecision Pi$25/tonProcessing costs to refine Delta into Super Delta are $1,680,000; processing costs to refine Pi into Precision Pi are $1,120,000.Required:a. Should Delta and Pi be sold as is or refined into Super Delta and Precision Pi?b. Identify any costs in the problem that are not relevant to this decision.c. What is the maximum profit that ADP Mining Company can expect to earn from the production of the 350,000 tons of Alpha?page 635

To determine whether ADP Mining Company should sell Delta and Pi as is or process them further into…

Answered: Exercise 16.12 LO 16-2, 16-3 Sell or…

FINANCIAL ACCOUNTING

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ISBN:9781259964947

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Chapter1: Financial Statements And Business Decisions

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%23 Requlred Information The following information applies to the questions displayed below.] Cane Company manufactures two products called Alpha and Beta that sell for $225 and $175, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 130,000 units of each product. Its average cost per unit for each product at this level of activity are given below. Alpha $ 42 42 Beta $ 24 Direct materials Direct labor Variable manufacturing overhead Traceable fixed manufacturing overhead Variable selling expenses Common fixed expenses 32. 24 27. 34. Total cost per unit The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expenses. are unavoidable and have been allocated to products based on sales dollars. 9. Assume that Cane expects to produce and sell 99,000 Alphas during the current year. A supplier has offered to manufacture and deliver 99,000 Alphas to Cane for…
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