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The management of Dominican Sugar Company is considering whether to process further raw sugar into refined sugar. Refined sugar can be sold for $2.15 per pound, and raw sugar can be sold without further processing for $1.20 per pound. Raw sugar is produced in batches of 42,000 pounds by processing 105,000 pounds of sugar cane, which costs $0.30 per pound of cane. Refined sugar will require additional processing costs of $0.45 per pound of raw sugar, and 1.20 pounds of raw sugar will produce 1 pound of refined sugar. Required: 1. Prepare a differential analysis as of March 24 to determine whether to sell raw sugar (Alternative 1) or process further into refined sugar (Alternative 2). If required, do not round interim calculations. For those boxes in which you must enter subtracted or negative numbers use a minus sign. Differential Analysis Sell Raw Sugar (Alt. 1) or Process Further into Refined Sugar (Alt. 2) March 24 Process Sell Raw Differential Further into Sugar (Alternative 1) Effects Refined Sugar (Alternative 2) (Alternative 2) Revenues, per batch 77,000 Costs, per batch -50,400 Profit (loss), per batch 26,600

The management of Dominican Sugar Company is considering whether to process further raw sugar into refined sugar. Refined sugar can be sold for $2.15 per pound, and raw sugar can be sold without further processing for $1.20 per pound. Raw sugar is produced in batches of 42,000 pounds by processing 105,000 pounds of sugar cane, which costs $0.30 per pound of cane. Refined sugar will require additional processing costs of $0.45 per pound of raw sugar, and 1.20 pounds of raw sugar will produce 1 pound of refined sugar. Required: 1. Prepare a differential analysis as of March 24 to determine whether to sell raw sugar (Alternative 1) or process further into refined sugar (Alternative 2). If required, do not round interim calculations. For those boxes in which you must enter subtracted or negative numbers use a minus sign. Differential Analysis Sell Raw Sugar (Alt. 1) or Process Further into Refined Sugar (Alt. 2) March 24 Process Sell Raw Differential Further into Sugar (Alternative 1) Effects Refined Sugar (Alternative 2) (Alternative 2) Revenues, per batch 77,000 Costs, per batch -50,400 Profit (loss), per batch 26,600

FINANCIAL ACCOUNTING
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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**Differential Analysis for Further Processing** The management of Dominican Sugar Company is evaluating whether to process raw sugar further into refined sugar. Refined sugar can be sold for $2.15 per pound, whereas raw sugar can be sold without further processing for $1.20 per pound. Raw sugar is produced in batches of 42,000 pounds by processing 105,000 pounds of sugar cane, which costs $0.30 per pound of cane. Refined sugar production will incur additional processing costs of $0.45 per pound of raw sugar, and 1.20 pounds of raw sugar are required to produce 1 pound of refined sugar. **Required:** 1. Prepare a differential analysis as of March 24 to decide whether to sell raw sugar (Alternative 1) or process further into refined sugar (Alternative 2). If required, do not round interim calculations. For boxes that require subtracted or negative numbers, use a minus sign. --- **Differential Analysis:** Sell Raw Sugar (Alt. 1) or Process Further into Refined Sugar (Alt. 2) – March 24 | | Sell Raw Sugar (Alternative 1) | Process Further into Refined Sugar (Alternative 2) | Differential Effects (Alternative 2) | |----------------------------------|--------------------------------|----------------------------------------------------|--------------------------------------| | Revenues, per batch | $77,000 | | | | Costs, per batch | -50,400 | | | | Profit (loss), per batch | $26,600 | | | --- The table summarizes the revenue, cost, and profit or loss for each alternative. The analysis aims to determine which option is more financially beneficial for the company by comparing the effects of processing decisions on profit margins.
Transcribed Image Text:**Differential Analysis for Further Processing** The management of Dominican Sugar Company is evaluating whether to process raw sugar further into refined sugar. Refined sugar can be sold for $2.15 per pound, whereas raw sugar can be sold without further processing for $1.20 per pound. Raw sugar is produced in batches of 42,000 pounds by processing 105,000 pounds of sugar cane, which costs $0.30 per pound of cane. Refined sugar production will incur additional processing costs of $0.45 per pound of raw sugar, and 1.20 pounds of raw sugar are required to produce 1 pound of refined sugar. **Required:** 1. Prepare a differential analysis as of March 24 to decide whether to sell raw sugar (Alternative 1) or process further into refined sugar (Alternative 2). If required, do not round interim calculations. For boxes that require subtracted or negative numbers, use a minus sign. --- **Differential Analysis:** Sell Raw Sugar (Alt. 1) or Process Further into Refined Sugar (Alt. 2) – March 24 | | Sell Raw Sugar (Alternative 1) | Process Further into Refined Sugar (Alternative 2) | Differential Effects (Alternative 2) | |----------------------------------|--------------------------------|----------------------------------------------------|--------------------------------------| | Revenues, per batch | $77,000 | | | | Costs, per batch | -50,400 | | | | Profit (loss), per batch | $26,600 | | | --- The table summarizes the revenue, cost, and profit or loss for each alternative. The analysis aims to determine which option is more financially beneficial for the company by comparing the effects of processing decisions on profit margins.
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