Differential Analysis for Further Processing The management of International Aluminum Co. is considering whether...

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Accounting

Differential Analysis for Further Processing
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 84 tons by smelting 540 tons of bauxite, which costs $107 per ton of
bauxite. Rolled aluminum will require additional processing costs of $600 per ton of ingot, and 1.25 tons of ingot will produce 1 ton of rolled aluminum.
Required:
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
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