Rise N’ Shine Coffee Company produces Columbian coffee in batches of 6,800 pounds. The standard quantity of materials required in the process is 6,800 pounds, which cost $4 per pound. Columbian coffee can be sold without further processing for $8.4 per pound. Columbian coffee can also be processed further to yield Decaf Columbian, which can be sold for $10 per pound. The processing into Decaf Columbian requires additional processing costs of $8,450 per batch. The additional processing will also cause a 6% 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). 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 $fill in the blank da35210a7005fbc_1 $fill in the blank da35210a7005fbc_2 $fill in the blank da35210a7005fbc_3 Costs fill in the blank da35210a7005fbc_4 fill in the blank da35210a7005fbc_5 fill in the blank da35210a7005fbc_6 Income (Loss) $fill in the blank da35210a7005fbc_7 $fill in the blank da35210a7005fbc_8 $fill in the blank da35210a7005fbc_9 b. Should Rise N’ Shine 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 1fa5a2075065f81_2 per pound

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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Sell or Process Further

Rise N’ Shine Coffee Company produces Columbian coffee in batches of 6,800 pounds. The standard quantity of materials required in the process is 6,800 pounds, which cost $4 per pound. Columbian coffee can be sold without further processing for $8.4 per pound. Columbian coffee can also be processed further to yield Decaf Columbian, which can be sold for $10 per pound. The processing into Decaf Columbian requires additional processing costs of $8,450 per batch. The additional processing will also cause a 6% 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).

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	$fill in the blank da35210a7005fbc_1	$fill in the blank da35210a7005fbc_2	$fill in the blank da35210a7005fbc_3
Costs	fill in the blank da35210a7005fbc_4	fill in the blank da35210a7005fbc_5	fill in the blank da35210a7005fbc_6
Income (Loss)	$fill in the blank da35210a7005fbc_7	$fill in the blank da35210a7005fbc_8	$fill in the blank da35210a7005fbc_9

b. Should Rise N’ Shine 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 1fa5a2075065f81_2 per pound

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