Sell or Process Further Abica Coffee Company produces Columbian coffee in batches of 6,200 pounds. The standard quantity of materials required in the process is 6,200 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 $12,701 per batch. The additional processing also causes a 5% loss of product due to evaporation.
Sell or Process Further
Abica Coffee Company produces Columbian coffee in batches of 6,200 pounds. The standard quantity of materials required in the process is 6,200 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
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 ddba1df9202a028_1 | $fill in the blank ddba1df9202a028_2 | $fill in the blank ddba1df9202a028_3 |
| Costs | fill in the blank ddba1df9202a028_4 | fill in the blank ddba1df9202a028_5 | fill in the blank ddba1df9202a028_6 |
| Income (Loss) | $fill in the blank ddba1df9202a028_7 | $fill in the blank ddba1df9202a028_8 | $fill in the blank ddba1df9202a028_9 |
b. Should Abica sell Columbian coffee or process further and sell Decaf Columbian?
Sell 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 e612d9ff4fa6ff3_2 per pound
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