Mizzou mining company mines an iron ore called alpha during

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Reference no: EM13582504

Mizzou Mining Company mines an iron ore called Alpha. During the month of December, 400,000 tons of Alpha were mined and processed at a cost of $742,500. As the Alpha ore is mined, it is processed into Delta and Pi, where 60% of the Alpha output becomes Delta and 40% becomes Pi. Each product can be sold as is or processed into the refined products Super Delta and Precision Pi. Selling prices for these products are:

	Delta	Super Delta	Pi	Precision Pi
Selling price	$7/ton	$15/ton	$12/ton	$24/ton

Processing costs to refine Delta into Super Delta are $2,400,000: processing costs to refine Pi into Precision Pi are $1,600,000.

Requirement 1:

(a)	What would be the incremental profit or loss per unit if Delta is refined into Super Delta? (Input the amount as positive value. Omit the "$" sign in your response.)

Incremental

(b)	What would be the incremental profit or loss per unit if Pi is refined into Precision Pi? (Omit the "$" sign in your response.)

Incremental

Requirement 2:

(a)	Should Delta be sold as is or refined into Super Delta?

(b)	Should Pi be sold as is or refined into Precision Pi?

Requirement 3:

Identify any costs in the problem that are not relevant to this decision.

Requirement 4:

What is the maximum profit that Mizzou Mining Company can expect to earn from the production of the 400,000 tons of Alpha? (Omit the "$" sign in your response.)

Maximum profit

Reference no: EM13582504

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