The management of International Aluminum Co. is considering whether to process aluminum ingot further into rolled aluminum. Rolled aluminum can be sold for $2,500 per ton, and ingot can be sold without further processing for $1,250 per ton. Ingot is produced in batches of 82 tons by smelting 500 tons of bauxite, which costs $102 per ton of bauxite. Rolled aluminum will require additional processing costs of $610 per ton of ingot, and 1.25 tons of ingot will produce 1 ton of rolled aluminum. Required: 1. Prepare a differential analysis as of February 5 to determine whether to sell aluminum ingot (Alternative 1) or process further into rolled aluminum (Alternative 2). If required, do not round interim calculations. If required, use a minus sign to indicate a loss. Differential Analysis Sell Ingot (Alt. 1) or Process Further into Rolled Aluminum (Alt. 2) February 5 Line Item Description Sell Ingot (Alternative 1) Process Further into Rolled Aluminum (Alternative 2) Differential Effects (Alternative 2) Revenues, per batch Costs, per batch Profit (loss), per batch 2. International Aluminum Co. be process aluminum ingot further, rather than sell aluminum ingot because profits would

Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter11: Differential Analysis And Product Pricing
Section: Chapter Questions
Problem 3CMA: Aril Industries is a multiproduct company that currently manufactures 30,000 units of Part 730 each...
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The management of International Aluminum Co. is considering whether to process aluminum ingot further into rolled aluminum. Rolled
aluminum can be sold for $2,500 per ton, and ingot can be sold without further processing for $1,250 per ton. Ingot is produced in batches of
82 tons by smelting 500 tons of bauxite, which costs $102 per ton of bauxite. Rolled aluminum will require additional processing costs of $610
per ton of ingot, and 1.25 tons of ingot will produce 1 ton of rolled aluminum.
Required:
1. Prepare a differential analysis as of February 5 to determine whether to sell aluminum ingot (Alternative 1) or process further into rolled
aluminum (Alternative 2). If required, do not round interim calculations. If required, use a minus sign to indicate a loss.
Differential Analysis
Sell Ingot (Alt. 1) or Process Further into Rolled Aluminum (Alt. 2)
February 5
Line Item Description
Sell Ingot
(Alternative 1)
Process Further
into Rolled Aluminum
(Alternative 2)
Differential Effects
(Alternative 2)
Revenues, per batch
Costs, per batch
Profit (loss), per batch
2. International Aluminum Co.
be
process aluminum ingot further, rather than sell aluminum ingot because profits would
Transcribed Image Text:The management of International Aluminum Co. is considering whether to process aluminum ingot further into rolled aluminum. Rolled aluminum can be sold for $2,500 per ton, and ingot can be sold without further processing for $1,250 per ton. Ingot is produced in batches of 82 tons by smelting 500 tons of bauxite, which costs $102 per ton of bauxite. Rolled aluminum will require additional processing costs of $610 per ton of ingot, and 1.25 tons of ingot will produce 1 ton of rolled aluminum. Required: 1. Prepare a differential analysis as of February 5 to determine whether to sell aluminum ingot (Alternative 1) or process further into rolled aluminum (Alternative 2). If required, do not round interim calculations. If required, use a minus sign to indicate a loss. Differential Analysis Sell Ingot (Alt. 1) or Process Further into Rolled Aluminum (Alt. 2) February 5 Line Item Description Sell Ingot (Alternative 1) Process Further into Rolled Aluminum (Alternative 2) Differential Effects (Alternative 2) Revenues, per batch Costs, per batch Profit (loss), per batch 2. International Aluminum Co. be process aluminum ingot further, rather than sell aluminum ingot because profits would
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