Rise N' Shine 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 $5.50 per pound. Columbian coffee can be sold without further processing for $9.22 per pound. Columbian coffee can also be processed further to yield Decaf Columbian, which can be sold for $11.88 per pound. The processing into Decaf Columbian requires additional processing costs of $10,230 per batch. The additional processing also causes a 5% loss of product due to evaporation. a. Prepare a differential analysis dated October 6 on whether to sell regular Columbian (Alternative 1) or process further into Decaf Columbian (Alternative 2). For those boxes in which you must enter subtracted or negative numbers use a minus sign. Differential Analysis Sell Regular Columbian (Alt. 1) or Process Further into Decaf Columbian (Alt. 2) October 6 Process Sell Differential Further into Regular Effect Decaf Columbian on Income Columbian (Alternative 1) (Alternative 2) (Alternative 2) Revenues $ 55,320 V $ 67,716 $ 12,396 Costs 10,230 10,230 X Income (Loss) 22,320 $ 24,486 $ 2,166

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**Sell or Process Further**

Rise N' Shine 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 costs $5.50 per pound. Columbian coffee can be sold without further processing for $9.22 per pound. Columbian coffee can also be processed further to yield Decaf Columbian, which can be sold for $11.88 per pound. The processing into Decaf Columbian requires additional processing costs of $10,230 per batch. The additional processing also causes a 5% loss of product due to evaporation.

**a.** Prepare a differential analysis dated October 6 on whether to sell regular Columbian (Alternative 1) or process further into Decaf Columbian (Alternative 2). For those boxes in which you must enter subtracted or negative numbers use a minus sign.

### Differential Analysis
**Sell Regular Columbian (Alt. 1) or Process Further into Decaf Columbian (Alt. 2)**  
**October 6**

|                               | Sell Regular Columbian (Alternative 1) | Process Further into Decaf Columbian (Alternative 2) | Differential Effect on Income (Alternative 2) |
|-------------------------------|--------------------------------------|-----------------------------------------------------|---------------------------------------------|
| **Revenues**                  | $55,320                              | $67,716                                              | $12,396                                      |
| **Costs**                     | 0                                    | 10,230                                              | -10,230                                      |
| **Income (Loss)**             | $22,320                              | $24,486                                              | $2,166                                       |

- **Revenues:** The revenue from selling regular Columbian coffee is $55,320. If processed further, the revenue becomes $67,716, resulting in a differential effect of $12,396.
- **Costs:** There are no additional costs for selling regular Columbian, but processing into Decaf incurs a cost of $10,230. This results in a negative differential effect of -$10,230.
- **Income (Loss):** Selling regular results in an income of $22,320, while processing into Decaf results in $24,486, with a differential income of $2,166 favoring further processing.
Transcribed Image Text:**Sell or Process Further** Rise N' Shine 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 costs $5.50 per pound. Columbian coffee can be sold without further processing for $9.22 per pound. Columbian coffee can also be processed further to yield Decaf Columbian, which can be sold for $11.88 per pound. The processing into Decaf Columbian requires additional processing costs of $10,230 per batch. The additional processing also causes a 5% loss of product due to evaporation. **a.** Prepare a differential analysis dated October 6 on whether to sell regular Columbian (Alternative 1) or process further into Decaf Columbian (Alternative 2). For those boxes in which you must enter subtracted or negative numbers use a minus sign. ### Differential Analysis **Sell Regular Columbian (Alt. 1) or Process Further into Decaf Columbian (Alt. 2)** **October 6** | | Sell Regular Columbian (Alternative 1) | Process Further into Decaf Columbian (Alternative 2) | Differential Effect on Income (Alternative 2) | |-------------------------------|--------------------------------------|-----------------------------------------------------|---------------------------------------------| | **Revenues** | $55,320 | $67,716 | $12,396 | | **Costs** | 0 | 10,230 | -10,230 | | **Income (Loss)** | $22,320 | $24,486 | $2,166 | - **Revenues:** The revenue from selling regular Columbian coffee is $55,320. If processed further, the revenue becomes $67,716, resulting in a differential effect of $12,396. - **Costs:** There are no additional costs for selling regular Columbian, but processing into Decaf incurs a cost of $10,230. This results in a negative differential effect of -$10,230. - **Income (Loss):** Selling regular results in an income of $22,320, while processing into Decaf results in $24,486, with a differential income of $2,166 favoring further processing.
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