Exxon petrochemical Chapter 6-37 Sell or Process Further
Not what you're looking for?
Chapter 6: 6-37, Sell or Process Further
An Exxon petrochemical factory produces two products, L and M, as a result of a particular joint process. Both products are sold to manufacturers as ingredients for assorted chemical products.
Product L sells at split off for $0.25 per gallon. M, for $0.30 per gallon. Data for April follow:
Joint processing cost $1,600,000
Gallons produced and sold
L 4,000,000
M 2,500,000
Suppose that in April the 2,500,000 gallons of M could have been processed further into Super M at an additional cost of $165,000. The Super M output would be sold for $0.36 per gallon. Product L would be sold at split off in any event.
Should M have been processed further in April and sold as Super M? Show your computations.
Purchase this Solution
Solution Summary
Your tutorial is attached (click in cells to see computation). You should not process further. Logic is explained to show you why.
Education
- BSc, University of Virginia
- MSc, University of Virginia
- PhD, Georgia State University
Recent Feedback
- "hey just wanted to know if you used 0% for the risk free rate and if you didn't if you could adjust it please and thank you "
- "Thank, this is more clear to me now."
- "Awesome job! "
- "ty"
- "Great Analysis, thank you so much"
Purchase this Solution
Free BrainMass Quizzes
IPOs
This Quiz is compiled of questions that pertain to IPOs (Initial Public Offerings)
Understanding the Accounting Equation
These 10 questions help a new student of accounting to understand the basic premise of accounting and how it is applied to the business world.
Lean your Process
This quiz will help you understand the basic concepts of Lean.
Organizational Behavior (OB)
The organizational behavior (OB) quiz will help you better understand organizational behavior through the lens of managers including workforce diversity.
Writing Business Plans
This quiz will test your understanding of how to write good business plans, the usual components of a good plan, purposes, terms, and writing style tips.