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 $77,000, and the result is 6,000 gallons of anderine and 8,400 gallons of dofinol. Betram Chemicals can sell the anderine at split-off for $10.00 per gallon and the dofinol for $6.40 per gallon. Alternatively, the anderine can be processed further at cost of $8.40 per gallon (of anderine) into cermine. takes 4 gallons of anderine for every gallon of cermine. A gallon of cermine sells for $56. Required: 1. Which alternative is more cost effective and by how much? NOTE: Do NOT round interim calculations and, required, round your answer to the nearest dollar. Process it further by $ 2. What if the production of anderine into cermine required additional purchasing and quality inspection activity? Every 490 gallons f anderine that undergo further processing require 23 more purchase orders at $12 each and 13 more quality inspection hours at $28 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 $ 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 $77,000, and the result is 6,000 gallons of anderine and 8,400 gallons of dofinol. Betram Chemicals can sell the anderine at split-off for $10.00 per gallon and the dofinol for $6.40 per gallon. Alternatively, the anderine can be processed further at cost of $8.40 per gallon (of anderine) into cermine. takes 4 gallons of anderine for every gallon of cermine. A gallon of cermine sells for $56. Required: 1. Which alternative is more cost effective and by how much? NOTE: Do NOT round interim calculations and, required, round your answer to the nearest dollar. Process it further by $ 2. What if the production of anderine into cermine required additional purchasing and quality inspection activity? Every 490 gallons f anderine that undergo further processing require 23 more purchase orders at $12 each and 13 more quality inspection hours at $28 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 $ X
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Sell at Split-Off or Process Further Decision, Alternatives, Relevant Costs
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
$77,000, and the result is 6,000 gallons of anderine and 8,400 gallons of dofinol. Betram Chemicals can sell the anderine at split-off for $10.00 per gallon and the dofinol for $6.40 per gallon. Alternatively, the anderine can be processed further at a
cost of $8.40 per gallon (of anderine) into cermine. It takes 4 gallons of anderine for every gallon of cermine. A gallon of cermine sells for $56.
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
✓ by $
X
2. What if the production of anderine into cermine required additional purchasing and quality inspection activity? Every 490 gallons of anderine that undergo further processing require 23 more purchase orders at $12 each and 13 more quality
inspection hours at $28 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 $
X
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education