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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 $2,200 per ton, and ingot can be sold without further processing for $1,100 per ton. Ingot is produced in batches of 80 tons by smelting 500 tons of bauxite, which costs $105 per ton of bauxite. Rolled aluminum will require additional processing costs of $620 per ton of ingot, and 1.25 tons of ingot will produce 1 ton of rolled aluminum (due to trim losses). Required: 1. Prepare a differential analysis as of February 5 to determine whether to sell aluminum ingot (Alternative or process further into rolled aluminum (Alternative 2). Use a minus sign to indicate subtracted amounts, negative amounts, or a loss. Differential Analysis Sell Ingot (Alt. 1) or Process Further into Rolled Aluminum (Alt. 2) February 5 Sell Ingot (Altemative 1) Process Further into Rolled Aluminum (Alternative 2) Differential Effect on Income (Alternative 2) Revenues, per batch Costs, per batch Income (loss), per batch $ 2, International Aluminum Co. process aluminum ingot further, rather than sell aluminum ingot because profits would be if ingot was processed further into rolled aluminum. Product Pricing using the Cost-Plus Approach Methods; Differential Analysis for Accepting Additional Business Night Glow Inc. recently began production of a new product, the halogen light, which required the investment of $1,620,000 estimated as follows: assets. The costs of producing and selling 8,100 halogen lights are Variable costs per unit: Fixed costs: Factory overhead Direct materials $81 $324,000 Direct labor Selling and administrative expenses 162,000 18 Factory overhead 36 Selling and administrative expenses 32 $167 Total variable cost per unit Night Glow Inc. is currently considering establishing a selling price for the halogen light. The president f Night Glow Inc. has decided to use the cost-plus approach to product pricing and has indicated that the halogen light must earn a 20 % return on invested assets. Required Note: Round all markup percentages to two decimal places, if required. Round all costs per unit and selling prices per unit to the nearest whole dollar. 1. Determine the amount of desired profit from the production and sale of halogen lights. 2. Assuming that the product cost method is used, determine the following: a. Product Cost amount per unit b. Markup Percentage c. Selling price per unit 3. (Appendix) Assuming that the total cost method is used, determine the following: a. Total Cost amount per unit b. Markup Percentage C. Selling price per unit 4. (Appendix) Assuming that the variable cost method is used, determine the following: a. Variable cost amount per unit b. Markup Percentage c. Selling price per unit 5. The cost-plus approach price computed above should be viewed as general guideline for establishing long-run normal prices; however, other considerations, such as could lead management to establish a different short-run price. 6. Assume that as of September 1, 4,500 units of halogen light have been produced and sold during the current year. Analysis of the domestic market indicates that 3,600 additional units of the halogen light are expected to be sold during the remainder f the year at the normal product price determined under the product cost method. On September 5, Night Glow Inc. received an offer from Tokyo Lighting Inc. for 1,400 units the halogen light at $202.50 each. Tokyo Lighting Inc. will market the units in Japan under its own brand name, and no variable selling and administrative expenses not expected to affect the domestic sales of the halogen light, and the additional units could be produced using associated with the sale will incurred by Night Glow Inc. The additional business existing productive, selling, and administrative capacity. a. Prepare a differential analysis of the proposed sale to Video Systems Inc. an amount is zero, enter "0", Differential Analysis Reject Order (Alt. 1) or Accept Order (Alt. 2) September 5 Income (Alternative 2) Reject Order (Alternative 1) Accept Order (Alternative 2) Differential Effect Revenues Costs: Variable manufacturing costs Income (Loss) b. Based on the differential analysis in part (a), should the proposal be accepted