Sell at Split-Off or Process Further Decision, Alternatives, Relevant Costs Betram Chemicals Company processes a number of chemical compounds used in producing industrial cleaning products. One compound is decomposed into two chemicals: anderine and dofinol. The cost of processing one batch of compound is $77,500, and the result is 6,400 gallons of anderine and 8,000 gallons of dofinol. Betram Chemicals can sell the anderine at split-off for $13.00 per gallon and the dofinol for $5.90 per gallon. Alternatively, the anderine can be processed further at a cost of $8.20 per gallon (of anderine) into cermine. takes 4 gallons of anderine for every gallon of cermine. A gallon of cermine sells for $65. Required: 1. Which alternative is more cost effective and by how much? NOTE: Do NOT round interim calculations and, if required, round your answer to the nearest dollar. Process it further 31,680 ✔ ✓by $ 2. What if the production of anderine into cermine required additional purchasing and quality inspection activity? Every 460 gallons of anderine that undergo further processing require 21 more purchase orders at $9 each and 17 more quality inspection hours at $26 each. Which alternative would be better and by how much? NOTE: Round interim calculations and your final answer to the nearest cent. Sell at split-off ✓by $ 1,097.21 X
Sell at Split-Off or Process Further Decision, Alternatives, Relevant Costs Betram Chemicals Company processes a number of chemical compounds used in producing industrial cleaning products. One compound is decomposed into two chemicals: anderine and dofinol. The cost of processing one batch of compound is $77,500, and the result is 6,400 gallons of anderine and 8,000 gallons of dofinol. Betram Chemicals can sell the anderine at split-off for $13.00 per gallon and the dofinol for $5.90 per gallon. Alternatively, the anderine can be processed further at a cost of $8.20 per gallon (of anderine) into cermine. takes 4 gallons of anderine for every gallon of cermine. A gallon of cermine sells for $65. Required: 1. Which alternative is more cost effective and by how much? NOTE: Do NOT round interim calculations and, if required, round your answer to the nearest dollar. Process it further 31,680 ✔ ✓by $ 2. What if the production of anderine into cermine required additional purchasing and quality inspection activity? Every 460 gallons of anderine that undergo further processing require 21 more purchase orders at $9 each and 17 more quality inspection hours at $26 each. Which alternative would be better and by how much? NOTE: Round interim calculations and your final answer to the nearest cent. Sell at split-off ✓by $ 1,097.21 X
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:Sell at Split-Off or Process Further Decision, Alternatives, Relevant Costs
Betram Chemicals Company processes a number of chemical compounds used in producing industrial cleaning products. One compound is decomposed into two chemicals: anderine and dofinol. The cost of processing one
batch of compound is $77,500, and the result is 6,400 gallons of anderine and 8,000 gallons of dofinol. Betram Chemicals can sell the anderine at split-off for $13.00 per gallon and the dofinol for $5.90 per gallon.
Alternatively, the anderine can be processed further at a cost of $8.20 per gallon (of anderine) into cermine. It takes 4 gallons of anderine for every gallon of cermine. A gallon of cermine sells for $65.
Required:
1. Which alternative is more cost effective and by how much?
NOTE: Do NOT round interim calculations and, if required, round your answer to the nearest dollar.
31,680 ✔
Process it further
by $
2. What if the production of anderine into cermine required additional purchasing and quality inspection activity? Every 460 gallons of anderine that undergo further processing require 21 more purchase orders at $9 each
and 17 more quality inspection hours at $26 each. Which alternative would be better and by how much?
NOTE: Round interim calculations and your final answer to the nearest cent.
Sell at split-off
by $
1,097.21 X
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