Sell at Split-Off or Process Further Decision, Alternatives, Relevant Costs Vihaan Chemicals Company processes a number...

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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 $78,000, and the result is 6,500 gallons of flexalene and 7,600 gallons of soreaphine. Vihaan Chemicals can sell the flexalene at split-off for $11.00 per gallon and the soreaphine for $5.80 per gallon. Alternatively, the flexalene can be processed further at a cost of $7.60 per gallon (of flexalene) into lactine. It takes 4 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 550 gallons of flexalene that undergo further processing require 22 more purchase orders at $10 each and 18 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 $ 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 $78,000, and the result is 6,500 gallons of flexalene and 7,600 gallons of soreaphine. Vihaan Chemicals can sell the flexalene at split-off for $11.00 per gallon and the soreaphine for $5.80 per gallon. Alternatively, the flexalene can be processed further at a cost of $7.60 per gallon (of flexalene) into lactine. It takes 4 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 550 gallons of flexalene that undergo further processing require 22 more purchase orders at $10 each and 18 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 $

Answer rating: 100% (QA)

1 Base Case No Additional Processing Selling at SplitOff Revenue from Flexalene 6500 gallons 1100gal... View the full answer