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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 $72,000, and the result is 6,500 gallons anderine and 8,400 gallons of dofinol. Betram Chemicals can sell the anderine at split-off for $9.00 per gallon and the dofinol for $6.15 per gallon. Alternatively, the anderine can be processed further at a cost of $8.00 per gallon (of anderine) into cermine. It takes 3 gallons of anderine for every gallon of cermine. A gallon of cermine sells for $61. Required:

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 $72,000, and the result is 6,500 gallons anderine and 8,400 gallons of dofinol. Betram Chemicals can sell the anderine at split-off for $9.00 per gallon and the dofinol for $6.15 per gallon. Alternatively, the anderine can be processed further at a cost of $8.00 per gallon (of anderine) into cermine. It takes 3 gallons of anderine for every gallon of cermine. A gallon of cermine sells for $61. Required:

Principles of Cost Accounting
Principles of Cost Accounting
17th Edition
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Edward J. Vanderbeck, Maria R. Mitchell
Chapter6: Process Cost Accounting—additional Procedures; Accounting For Joint Products And By-products
Section: Chapter Questions
Problem 13P: Venezuela Oil Inc. transports crude oil to its refinery where it is processed into main products...
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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 $72,000, and the result is 6,500 gallons of anderine and 8,400 gallons of dofinol. Betram Chemicals can sell the anderine at split-off for $9.00 per gallon and the dofinol for $6.15 per gallon. Alternatively, the anderine can be processed further at a cost of $8.00 per gallon (of anderine) into cermine. It takes 3 gallons of anderine for every gallon of cermine. A gallon of cermine sells for $61. 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 $ X 2. What if the production of anderine into cermine required additional purchasing and quality inspection activity? Every 460 gallons of anderine that undergo further processing require 23 more purchase orders at $9 each and 16 more quality inspection hours at $28 each. Which alternative would be better and by how much? NOTE: Round interim calculations and your final answer to the nearest cent. Process it further by $ X
Transcribed Image Text: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 $72,000, and the result is 6,500 gallons of anderine and 8,400 gallons of dofinol. Betram Chemicals can sell the anderine at split-off for $9.00 per gallon and the dofinol for $6.15 per gallon. Alternatively, the anderine can be processed further at a cost of $8.00 per gallon (of anderine) into cermine. It takes 3 gallons of anderine for every gallon of cermine. A gallon of cermine sells for $61. 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 $ X 2. What if the production of anderine into cermine required additional purchasing and quality inspection activity? Every 460 gallons of anderine that undergo further processing require 23 more purchase orders at $9 each and 16 more quality inspection hours at $28 each. Which alternative would be better and by how much? NOTE: Round interim calculations and your final answer to the nearest cent. Process it further by $ X
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