
Cornerstones of Cost Management 2nd Edition by Don Hansen ,Maryanne Mowen
النسخة 2الرقم المعياري الدولي: 978-1111824402
Cornerstones of Cost Management 2nd Edition by Don Hansen ,Maryanne Mowen
النسخة 2الرقم المعياري الدولي: 978-1111824402 تمرين 16
Sell at Split-Off or Process Further Decision, Alternatives, Relevant Costs
Betram Chemicals Company processes a number of chemical compounds used in producing industrial cleaning products. One compound is decomposed into two chemicals: anderine and dofinol. The cost of processing one batch of compound is $74,000, and the result is 6,000 gallons of anderine and 8,000 gallons of dofinol. Betram Chemicals can sell the anderine at split-off for $11 per gallon and the dofinol for $6.75 per gallon. Alternatively, the anderine can be processed further at a cost of $8 per gallon (of anderine) into cermine. It takes 3 gallons of anderine for every gallon of cermine. A gallon of cermine sells for $60.
Required:
1. List the alternatives being considered.
2. List the relevant benefits and costs for each alternative.
3. Which alternative is more cost effective and by how much?
4. What if the production of anderine into cermine required additional purchasing and quality inspection activity? Every 500 gallons of anderine that undergo further processing require 20 more purchase orders at $10 each and 15 more quality inspection hours at $25 each. Which alternative would be better and by how much?
Betram Chemicals Company processes a number of chemical compounds used in producing industrial cleaning products. One compound is decomposed into two chemicals: anderine and dofinol. The cost of processing one batch of compound is $74,000, and the result is 6,000 gallons of anderine and 8,000 gallons of dofinol. Betram Chemicals can sell the anderine at split-off for $11 per gallon and the dofinol for $6.75 per gallon. Alternatively, the anderine can be processed further at a cost of $8 per gallon (of anderine) into cermine. It takes 3 gallons of anderine for every gallon of cermine. A gallon of cermine sells for $60.
Required:
1. List the alternatives being considered.
2. List the relevant benefits and costs for each alternative.
3. Which alternative is more cost effective and by how much?
4. What if the production of anderine into cermine required additional purchasing and quality inspection activity? Every 500 gallons of anderine that undergo further processing require 20 more purchase orders at $10 each and 15 more quality inspection hours at $25 each. Which alternative would be better and by how much?
التوضيح
1)Identify the considerable alternatives...
Cornerstones of Cost Management 2nd Edition by Don Hansen ,Maryanne Mowen
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