VTK Corporation | ||||
Without Processing | ||||
Production in excess(in barrel) | 10000 | |||
Spot Price/Barrel | $59.83 | |||
Extra Production Revenue | $598,300.00 | |||
Refining | ||||
Quantity(Gallon) | Price per Gallon | Revenue | ||
Butane | 44000 | $1.40 | $61,600.00 | |
Naphtalene | 198000 | $1.38 | $273,240.00 | |
Kerosene | 60000 | $3.99 | $239,400.00 | |
Total revenue by refining | $574,240.00 | |||
Cost of Refining | $5,500 | |||
Profit | $568,740.00 | |||
Note : Since heavy gas oil does not have current market so there is no need to run distiller | ||||
Quantity(Gallon) | Price Per Gallon | |||
Further Processing | ||||
If only butane is processed | ||||
Propane | 42800 | $1.51 | $64,628.00 | |
Extra revenue due to processing | $3,028.00 | |||
Extra cost | $2,000 | |||
Extra Profit | $1,028.00 | |||
profit if only butane is processed | $569,768.00 | |||
if butane as well as napthalene is further processed | ||||
Gasoline | 193000 | $1.66 | $320,380.00 | |
Extra revenue by Gasoline | $47,140.00 | |||
Extra Cost in generating Gasoline | $1,900 | |||
Extra Profit due to gasoline conversion | $45,240.00 | |||
Extra Profit due to propane conversion | $1,028.00 | |||
Profit if butane as well as napthalene is processed further | $615,008.00 | |||
Decision : Further processing is better |
You are a Logistics manager for VKT Corp., and energy extraction and production company. A oil...
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