Heavenly Dessertprocesses cocoa beans into cocoa powder at a processing cost of$9,500per batch.Heavenly Dessertcan sell the cocoa powder as is, or it can process the cocoa powder further into either chocolate syrup or boxed assorted chocolates. Once processed, each batch of cocoa beans would result in the following sales revenue:1(Clickthe icon to view the sales revenue amounts and additional information.) Has the president made the right or wrong decision? Explain your answer. Be sure to include the correct financial analysis in your response. Begin by completing the following incremental analysis to compare selling the cocoa powder as is with processing it further. (For amounts with a value of $0, make sure to enter "0" in the appropriate input box.) Sell as Cocoa PowderSell as Chocolate SyrupSell as Boxed Assorted ChocolatesRevenue Less: Additional processing costs Net benefit Has the president made the right or wrong decision? Explain your answer. The president has made the(1) decision. Based on the analysis above, the company would realize the highest profits by(2) 1: Data TableCocoa powder$13,500Chocolate syrup96,000Boxed assorted chocolates194,000 The cost of transforming the cocoa powder into chocolate syrup would be$65,000.Likewise, the company would incur a cost of$177,000to transform the cocoa powder into boxed assorted chocolates. The company president has decided to make boxed assorted chocolates due to its high sales value and to the fact that the cocoa bean processing cost of$9,500eats up most of the cocoa powder profits.(1) right wrong(2) processing the cocoa powder into boxed chocolates. processing the cocoa powder into chocolate syrup. selling the cocoa powder as is.

Processing cost of cocoa beans into cocoa powder which is already incurred is sunk cost and not…

Answered: Heavenly Dessert processes cocoa beans…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Heavenly Dessert

processes cocoa beans into cocoa powder at a processing cost of

$9,500

per batch.

Heavenly Dessert

can sell the cocoa powder as is, or it can process the cocoa powder further into either chocolate syrup or boxed assorted chocolates. Once processed, each batch of cocoa beans would result in the following sales revenue:

1(Click

the icon to view the sales revenue amounts and additional information.)

Has the president made the right or wrong decision? Explain your answer. Be sure to include the correct financial analysis in your response.

Begin by completing the following incremental analysis to compare selling the cocoa powder as is with processing it further. (For amounts with a value of $0, make sure to enter "0" in the appropriate input box.)

	Sell as Cocoa Powder	Sell as Chocolate Syrup	Sell as Boxed Assorted Chocolates
Revenue
Less: Additional processing costs
Net benefit

Has the president made the right or wrong decision? Explain your answer.

The president has made the

(1)

decision. Based on the analysis above, the company would realize the highest profits by

(2)

1: Data Table

Cocoa powder	$13,500
Chocolate syrup	96,000
Boxed assorted chocolates	194,000

The cost of transforming the cocoa powder into chocolate syrup would be

$65,000.

Likewise, the company would incur a cost of

$177,000

to transform the cocoa powder into boxed assorted chocolates. The company president has decided to make boxed assorted chocolates due to its high sales value and to the fact that the cocoa bean processing cost of

$9,500

eats up most of the cocoa powder profits.

(1)

right

wrong

(2)

processing the cocoa powder into boxed chocolates.

processing the cocoa powder into chocolate syrup.

selling the cocoa powder as is.

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