Sell or Process Further Abica Coffee Company produces Columbian coffee in batches of 5,300 pounds. The standard quantity of materials required in the process is 5,300 pounds, which cost $6.00 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 $10,950 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. Abica Coffee Company Proposal to Process Columbian Coffee Further Differential Analysis Report Differential revenue from further processing per batch: $ $ Differential cost per batch: $ b. Should Abica Coffee 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 the nearest cent.$ 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 5,300 pounds. The standard quantity of materials required in the process is 5,300 pounds, which cost $6.00 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 $10,950 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.

Abica Coffee Company
Proposal to Process Columbian Coffee Further
Differential Analysis Report
Differential revenue from further processing per batch:
	$

		$
Differential cost per batch:

		$

b. Should Abica Coffee 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 the nearest cent.
$ per pound

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