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Sell at Split-Off or Process Further Decision, Alternatives, Relevant Costs Vihaan Chemicals Company processes a number of chemical compounds used in disinfecting health club fitness equipment. One compound is decomposed into two chemicals: flexalene and soreaphine. The cost of processing one batch of compound is $74,500, and the result is 6,400 gallons of flexalene and 8,400 gallons of soreaphine. Vihaan Chemicals can sell the flexalene at split-off for $12.00 per gallon and the soreaphine for $6.50 per gallon. Alternatively, the flexalene can be processed further at a cost of $7.80 per gallon (of flexalene) into lactine. It takes 3 gallons of flexalene for every gallon of lactine. A gallon of lactine sells for $64. 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. by $ 2. What if the production of flexalene into lactine required additional purchasing and quality inspection activity? Every 480 gallons of flexalene that undergo further processing require 22 more purchase orders at $10 each and 14 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. by $

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