1. Question Content Area

   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 $2,400 per ton, and ingot can be sold without further processing for $1,200 per ton. Ingot is produced in batches of 90 tons by smelting 550 tons of bauxite, which costs $103 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:

   Question Content Area

   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

   	Sell Ingot (Alternative 1)	Process Further into Rolled Aluminum (Alternative 2)	Differential Effects (Alternative 2)
   Revenues, per batch	$fill in the blank aa4ea707905305c_1	$fill in the blank aa4ea707905305c_2	$fill in the blank aa4ea707905305c_3
   Costs, per batch	fill in the blank aa4ea707905305c_4	fill in the blank aa4ea707905305c_5	fill in the blank aa4ea707905305c_6
   Profit (loss), per batch	$fill in the blank aa4ea707905305c_7	$fill in the blank aa4ea707905305c_8	$fill in the blank aa4ea707905305c_9

   Question Content Area

   2. International Aluminum Co.

   shouldshould not

   process aluminum ingot further, rather than sell aluminum ingot because profits would be

   increasedreduced

   .