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The management of International Aluminium Co. is considering whether to process aluminum ingot further into rolled aluminium. Rolled aluminium can be sold for $2200 per ton, and ingot can be sold without further processing for $1100 per ton. Ingot is produced in batches of 80 tons by smelting 500 tons of bauxite, which costs $105 per ton of bauxite. Rolled aluminium will require additional processing costs of $620 per ton ingot, and 1.25 tons of ingot will produce 1 ton of rolled aluminium.  prepare a differential analysis as of February 5 to determine whether to sell aluminium ingot or process further into rolled aluminium.

The management of International Aluminium Co. is considering whether to process aluminum ingot further into rolled aluminium. Rolled aluminium can be sold for $2200 per ton, and ingot can be sold without further processing for $1100 per ton. Ingot is produced in batches of 80 tons by smelting 500 tons of bauxite, which costs $105 per ton of bauxite. Rolled aluminium will require additional processing costs of $620 per ton ingot, and 1.25 tons of ingot will produce 1 ton of rolled aluminium.  prepare a differential analysis as of February 5 to determine whether to sell aluminium ingot or process further into rolled aluminium.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The management of International Aluminium Co. is considering whether to process aluminum ingot further into rolled aluminium. Rolled aluminium can be sold for $2200 per ton, and ingot can be sold without further processing for $1100 per ton. Ingot is produced in batches of 80 tons by smelting 500 tons of bauxite, which costs $105 per ton of bauxite. Rolled aluminium will require additional processing costs of $620 per ton ingot, and 1.25 tons of ingot will produce 1 ton of rolled aluminium. 
prepare a differential analysis as of February 5 to determine whether to sell aluminium ingot or process further into rolled aluminium.

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