Question Content Area Sell at Split-Off or Process Further Decision, Alternatives, Relevant Costs Vihaan Chemicals Company processes a number of chemical compounds used in disinfecting health club fitness equipment. One compound is
Question Content Area Sell at Split-Off or Process Further Decision, Alternatives, Relevant Costs Vihaan Chemicals Company processes a number of chemical compounds used in disinfecting health club fitness equipment. One compound is decomposed into two chemicals: flexalene and soreaphine. The cost of processing one batch of compound is $77,000, and the result is 6,300 gallons of flexalene and 8,100 gallons of soreaphine. Vihaan Chemicals can sell the flexalene at split-off for $11.00 per gallon and the soreaphine for $7.05 per gallon. Alternatively, the flexalene can be processed further at a cost of $7.30 per gallon (of flexalene) into lactine. It takes 3 gallons of flexalene for every gallon of lactine. A gallon of lactine sells for $62.
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