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 $6,000$ gallons of flexalene and $8,100$ gallons of soreaphine. Vihaan Chemicals can sell the

flexalene at split$-$off for $$13\mathrm{.}00$ per gallon and the soreaphine for $$6\mathrm{.}45$ per gallon. Alternatively, the flexalene can be

processed further at a cost of $$8\mathrm{.}30$ per gallon $($of flexalene$)$ into lactine. It takes $3$ gallons of flexalene for every gallon of

lactine. A gallon of lactine sells for $$58.$

Required:

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 $

What if the production of flexalene into lactine required additional purchasing and quality inspection activity? Every $470$

gallons of flexalene that undergo further processing require $18$ more purchase orders at $$9$ each and $17$ more quality

inspection hours at $$27$ each. Which alternative would be better and by how much?

NOTE: Round interim calculations and your final answer to the nearest cent. 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 $$78,000,$ and the result is $6,000$ gallons of flexalene and $8,100$ gallons of soreaphine. Vihaan Chemicals can sell the flexalene at split$-$off for $$13\mathrm{.}00$ per gallon and the soreaphine for $$6\mathrm{.}45$ per gallon. Alternatively, the flexalene can be processed further at a cost of $$8\mathrm{.}30$ per gallon $($of flexalene$)$ into lactine. It takes $3$ gallons of flexalene for every gallon of lactine. A gallon of lactine sells for $$58.$

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.

Process it further by $$11,800$

$2.$ What if the production of flexalene into lactine required additional purchasing and quality inspection activity? Every $470$ gallons of flexalene that undergo further processing require $18$ more purchase orders at $$9$ each and $17$ more quality inspection hours at $$27$ each. Which alternative would be better and by how much?

NOTE: Round interim calculations and your final answer to the nearest cent.

sell at split$-$off by $$($fill in the blank $2)$