produces ban coffee in batches of 5,100 pounds. The standard quantity of materials required in the Columbian coffee can be sold without further processing for $7.40 per pound. Columbian coffee can also be processed further ton per pound. The processing into Decaf Columbian requires additional processing costs of $14,450 per batch, The additional proce evaporation a. Prepare a differential analysis report for the decision to sell or process further. Abica Coffee Company
produces ban coffee in batches of 5,100 pounds. The standard quantity of materials required in the Columbian coffee can be sold without further processing for $7.40 per pound. Columbian coffee can also be processed further ton per pound. The processing into Decaf Columbian requires additional processing costs of $14,450 per batch, The additional proce evaporation a. Prepare a differential analysis report for the decision to sell or process further. Abica Coffee Company
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Sell or Process Further
Abica Coffee Company produces Columbian coffee in batches of 5,100 pounds. The standard quantity of materials required in the process is 5,100 pounds, which cost $4.00 per pound.
Columbian coffee can be sold without further processing for $7.40 per pound. Columbian coffee can also be processed further to yield Decaf Columbian, which can be sold for $12.00
per pound. The processing into Decaf Columbian requires additional processing costs of $14,450 per batch, The additional processing will also cause a 5% love of product due to
evaporation.
a. Prepare a differential analysis report for the decision to sell or process further.
Abica Coffee Company
Proposal to Process Columbian Coffee Further
Differential Analysis Report
Differential revenue from further processing per batch:
Differential cost per batch:
000
b. Should Abica Coffee sell Columbian coffee or process further and sell Decaf Columbian?
c. Determine the price of Decaf Columbian that would cause nether an advantage nor a disadvantage for processing further and selling Decaf Columbian, Roond your answer to the
nearest cent.
per pound
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