The management of Pittsburgh Aluminum Co. is considering whether to process

The management of Pittsburgh Aluminum Co. is considering whether to process aluminum ingot further into rolled aluminum. Rolled aluminum can be sold for $1,800 per ton, and ingot can be sold without further processing for $1,000 per ton. Ingot is produced in batches of 72 tons by smelting 400 tons of bauxite, which costs $90 per ton of bauxite. Rolled aluminum will require additional processing costs of $525 per ton of ingot, and 1.2 tons of ingots will produce 1 ton of rolled aluminum (due to trim losses).

Prepare a differential analysis as of December 20, 2012, to determine whether to sell aluminum ingot (Alternative 1) or process further into rolled aluminum (Alternative 2).

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