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Zing Coffee Company produces Columbian coffee in batches of 5,800 pounds. The standard quantity of materials required in the process is 5,800 pounds, which cost $4.00 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 processing costs of $12,050 per batch. The additional processing will also cause a 5% loss of product due to evaporation. a. Prepare a differential analysis report for the decision to sell or process further. Zing Coffee Company Proposal to Process Columbian Coffee Further Differential Analysis Report Differential revenue from further processing per batch: Revenue from sale of Decaf Columbian v Revenue from sale of Columbian coffee v Differential revenue v Differential cost per batch: Additional cost of producing Decaf Columbian v Differential loss from further processing Decaf Columbian per batch v Feedback TCheck My Work 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 Zing Coffee sell Columbian coffee or process further and sell Decaf Columbian? No, sell Columbian coffee v 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. per pound

Zing Coffee Company produces Columbian coffee in batches of 5,800 pounds. The standard quantity of materials required in the process is 5,800 pounds, which cost $4.00 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 processing costs of $12,050 per batch. The additional processing will also cause a 5% loss of product due to evaporation. a. Prepare a differential analysis report for the decision to sell or process further. Zing Coffee Company Proposal to Process Columbian Coffee Further Differential Analysis Report Differential revenue from further processing per batch: Revenue from sale of Decaf Columbian v Revenue from sale of Columbian coffee v Differential revenue v Differential cost per batch: Additional cost of producing Decaf Columbian v Differential loss from further processing Decaf Columbian per batch v Feedback TCheck My Work 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 Zing Coffee sell Columbian coffee or process further and sell Decaf Columbian? No, sell Columbian coffee v 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. per pound

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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Sell or Process Further Zing Coffee Company produces Columbian coffee in batches of 5,800 pounds. The standard quantity of materials required in the process is 5,800 pounds, which cost $4.00 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 processing costs of $12,050 per batch. The additional processing will also cause a 5% loss of product due to evaporation. a. Prepare a differential analysis report for the decision to sell or process further. Zing Coffee Company Proposal to Process Columbian Coffee Further Differential Analysis Report Differential revenue from further processing per batch: Revenue from sale of Decaf Columbian v Revenue from sale of Columbian coffee v Differential revenue v Differential cost per batch: Additional cost of producing Decaf Columbian v Differential loss from further processing Decaf Columbian per batch v Feedback V Check My Work 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 Zing Coffee sell Columbian coffee or process further and sell Decaf Columbian? No, sell Columbian coffee v 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. per pound
Transcribed Image Text:Sell or Process Further Zing Coffee Company produces Columbian coffee in batches of 5,800 pounds. The standard quantity of materials required in the process is 5,800 pounds, which cost $4.00 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 processing costs of $12,050 per batch. The additional processing will also cause a 5% loss of product due to evaporation. a. Prepare a differential analysis report for the decision to sell or process further. Zing Coffee Company Proposal to Process Columbian Coffee Further Differential Analysis Report Differential revenue from further processing per batch: Revenue from sale of Decaf Columbian v Revenue from sale of Columbian coffee v Differential revenue v Differential cost per batch: Additional cost of producing Decaf Columbian v Differential loss from further processing Decaf Columbian per batch v Feedback V Check My Work 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 Zing Coffee sell Columbian coffee or process further and sell Decaf Columbian? No, sell Columbian coffee v 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. per pound
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