The prices of chemicals change with time, but in 1999 typical prices were $45/to
ID: 485910 • Letter: T
Question
The prices of chemicals change with time, but in 1999 typical prices were $45/ton for sulfur on the U.S. Gulf Coast and $75/ton for sulfuric acid in the eastern United States. The railroad cost of shipping bulk cargoes in the United States was roughly $0.03 per ton mile.A.) If you buy sulfur and make it into sulfuric acid to sell, at these prices how much per ton of acid can you afford to pay for the capital and operating costs of the sulfuric acid plant in order to break even?
B.) If you must ship sulfur or sulfuric acid 500 miles to a customer, what is the shipping cost per ton of contained sulfur?
C.) What do these answers tell you about the economics of shipping sulfur or sulfuric acid? The prices of chemicals change with time, but in 1999 typical prices were $45/ton for sulfur on the U.S. Gulf Coast and $75/ton for sulfuric acid in the eastern United States. The railroad cost of shipping bulk cargoes in the United States was roughly $0.03 per ton mile.
A.) If you buy sulfur and make it into sulfuric acid to sell, at these prices how much per ton of acid can you afford to pay for the capital and operating costs of the sulfuric acid plant in order to break even?
B.) If you must ship sulfur or sulfuric acid 500 miles to a customer, what is the shipping cost per ton of contained sulfur?
C.) What do these answers tell you about the economics of shipping sulfur or sulfuric acid?
A.) If you buy sulfur and make it into sulfuric acid to sell, at these prices how much per ton of acid can you afford to pay for the capital and operating costs of the sulfuric acid plant in order to break even?
B.) If you must ship sulfur or sulfuric acid 500 miles to a customer, what is the shipping cost per ton of contained sulfur?
C.) What do these answers tell you about the economics of shipping sulfur or sulfuric acid?
Explanation / Answer
Analysis of cost
A) S = $45/ton
H2SO4 = $75/ton
shipping cost = $0.03 ton/mile
For even ditribution, we would have (75+45)/2 = $60/ton for production and $60/ton for operating cost.
B) For 500 mile shipping cost = 0.03 x 500 = $15 for 500 mile.
C) thus it is easy to transport sulfur and be more economic than sulfuric acid.
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