Dakota Coffee Company produces Columbian coffee in batches of 7,500 pounds. The standard quantity of materials required in the process is 7,500 pounds, which cost $6.00 per pound. Columbian coffee can be sold without further processing for $9.80 per pound. Columbian coffee can also be processed further to yield Decaf Columbian, which can be sold for $11.60 per pound. The processing into Decaf Columbian requires additional processing costs of $6,300 per batch. The additional processing will also cause a 5% loss of product due to evaporation. Question Content Area
Sell or Process Further
Dakota Coffee Company produces Columbian coffee in batches of 7,500 pounds. The standard quantity of materials required in the process is 7,500 pounds, which cost $6.00 per pound. Columbian coffee can be sold without further processing for $9.80 per pound. Columbian coffee can also be processed further to yield Decaf Columbian, which can be sold for $11.60 per pound. The processing into Decaf Columbian requires additional
Question Content Area
a. Prepare a differential analysis dated December 11 on whether to sell regular Columbian (Alternative 1) or process further into Decaf Columbian (Alternative 2). If required, use a minus sign to indicate a loss.
Sell Regular (Alternative 1) |
Process Further into Decaf (Alternative 2) |
Differential Effects (Alternative 2) |
|
| Revenues | $fill in the blank 3e5fd7fe007502b_1 | $fill in the blank 3e5fd7fe007502b_2 | $fill in the blank 3e5fd7fe007502b_3 |
| Costs | fill in the blank 3e5fd7fe007502b_4 | fill in the blank 3e5fd7fe007502b_5 | fill in the blank 3e5fd7fe007502b_6 |
| $fill in the blank 3e5fd7fe007502b_7 | $fill in the blank 3e5fd7fe007502b_8 | $fill in the blank 3e5fd7fe007502b_9 |
Question Content Area
b. Should Dakota Coffee Company sell Columbian coffee or process further and sell Decaf Columbian?
c. Determine the price of Decaf Columbian that would cause neither an advantage nor a disadvantage for processing further and selling Decaf Columbian. Round your answer to two decimal places.
$fill in the blank 4af34dfca037015_2 per pound
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