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My 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, were 60% of the Alpha output becomes Delta and 40% becomes Pi. Each product can be sold as it or processed into the refined products Super Delta and Precision Pi. Selling prices for these products are:

Delta = $7/ton
Super Delta = $15/ton
Pi = $12/ton
Precision Pi = $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.Should Delta and Pi be sold as it or refined into Super Delta and Precision Pi? Why did you choose your answer?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9974929

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