Abica Coffee Company produces Columbian coffee in batches of 6,500 pounds. The standard quantity of materials required in the process is 6,500 pounds, which cost $6 per pound. Columbian coffee can be sold without further processing for $9 per pound. Columbian coffee can also be processed further to yield Decaf Columbian, which can be sold for $12 per pound. The processing into Decaf Columbian requires additional processing costs of $13,068 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 $fill in the blank 97ce1f063fdffa0_1 $fill in the blank 97ce1f063fdffa0_2 $fill in the blank 97ce1f063fdffa0_3 Costs fill in the blank 97ce1f063fdffa0_4 fill in the blank 97ce1f063fdffa0_5 fill in the blank 97ce1f063fdffa0_6 Income (Loss) $fill in the blank 97ce1f063fdffa0_7 $fill in the blank 97ce1f063fdffa0_8 $fill in the blank 97ce1f063fdffa0_9 Feedback b. Should Abica 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. $_ per pound

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter11: Differential Analysis And Product Pricing

Section: Chapter Questions

Problem 12E: Sell or process further Dakota Coffee Company produces Columbian coffee in batches of 7,500 pounds....

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Sell or Process Further

Abica Coffee Company produces Columbian coffee in batches of 6,500 pounds. The standard quantity of materials required in the process is 6,500 pounds, which cost $6 per pound. Columbian coffee can be sold without further processing for $9 per pound. Columbian coffee can also be processed further to yield Decaf Columbian, which can be sold for $12 per pound. The processing into Decaf Columbian requires additional processing costs of $13,068 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	$fill in the blank 97ce1f063fdffa0_1	$fill in the blank 97ce1f063fdffa0_2	$fill in the blank 97ce1f063fdffa0_3
Costs	fill in the blank 97ce1f063fdffa0_4	fill in the blank 97ce1f063fdffa0_5	fill in the blank 97ce1f063fdffa0_6
Income (Loss)	$fill in the blank 97ce1f063fdffa0_7	$fill in the blank 97ce1f063fdffa0_8	$fill in the blank 97ce1f063fdffa0_9

Feedback

b. Should Abica 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.

$_________ per pound

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