Prepare a differential analysis report for the decision to sell or process further. Abica Coffee CompanyProcess Columbian Coffee FurtherDifferential Analysis Report
Sell or Process Further
Abica Coffee Company produces Columbian coffee in batches of 6,000 pounds. The standard quantity of materials required in the process is 6,000 pounds, which cost $5.00 per pound. Columbian coffee can be sold without further processing for $8.40 per pound. Columbian coffee can also be processed further to yield Decaf Columbian, which can be sold for $10.00 per pound. The processing into Decaf Columbian requires additional
a. Prepare a differential analysis report for the decision to sell or process further.
| Differential revenue from further processing per batch: | ||
|
|
$Revenue from sale of Decaf Columbian | |
|
|
Revenue from sale of Columbian coffee | |
|
|
$Differential revenue | |
| Differential cost per batch: | ||
|
|
Additional cost of producing Decaf Columbian | |
|
|
$Differential loss from further processing Decaf Columbian per batch |
a. Follow Exhibit 10 in the text. For both products, subtract the costs from the revenues. Determine the differential effect on the revenues, costs, and income (loss).
b. Should Abica Coffee 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 the nearest cent.
$fill in the blank ae143ffdffe6f86_2 per pound
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
