produces ban coffee in batches of 5,100 pounds. The standard quantity of materials required in the Columbian coffee can be sold without further processing for $7.40 per pound. Columbian coffee can also be processed further ton per pound. The processing into Decaf Columbian requires additional processing costs of $14,450 per batch, The additional proce evaporation a. Prepare a differential analysis report for the decision to sell or process further. Abica Coffee Company

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 5,100 pounds. The standard quantity of materials required in the process is 5,100 pounds, which cost $4.00 per pound.
Columbian coffee can be sold without further processing for $7.40 per pound. Columbian coffee can also be processed further to yield Decaf Columbian, which can be sold for $12.00
per pound. The processing into Decaf Columbian requires additional processing costs of $14,450 per batch, The additional processing will also cause a 5% love of product due to
evaporation.
a. Prepare a differential analysis report for the decision to sell or process further.
Abica Coffee Company
Proposal to Process Columbian Coffee Further
Differential Analysis Report
Differential revenue from further processing per batch:
Differential cost per batch:
000
b. Should Abica Coffee sell Columbian coffee or process further and sell Decaf Columbian?
c. Determine the price of Decaf Columbian that would cause nether an advantage nor a disadvantage for processing further and selling Decaf Columbian, Roond your answer to the
nearest cent.
per pound
Transcribed Image Text:Sell or Process Further Abica Coffee Company produces Columbian coffee in batches of 5,100 pounds. The standard quantity of materials required in the process is 5,100 pounds, which cost $4.00 per pound. Columbian coffee can be sold without further processing for $7.40 per pound. Columbian coffee can also be processed further to yield Decaf Columbian, which can be sold for $12.00 per pound. The processing into Decaf Columbian requires additional processing costs of $14,450 per batch, The additional processing will also cause a 5% love of product due to evaporation. a. Prepare a differential analysis report for the decision to sell or process further. Abica Coffee Company Proposal to Process Columbian Coffee Further Differential Analysis Report Differential revenue from further processing per batch: Differential cost per batch: 000 b. Should Abica Coffee sell Columbian coffee or process further and sell Decaf Columbian? c. Determine the price of Decaf Columbian that would cause nether an advantage nor a disadvantage for processing further and selling Decaf Columbian, Roond your answer to the nearest cent. per pound
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