Question
Abica Coffee Company produces Columbian coffee in batches of 5,600 pounds. The standard quantity of materials required in the process is 5,600 pounds, which cost
Abica Coffee Company produces Columbian coffee in batches of 5,600 pounds. The standard quantity of materials required in the process is 5,600 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 $11.00 per pound. The processing into Decaf Columbian requires additional processing costs of $11,250 per batch. The additional processing will also cause a 5% loss of product due to evaporation.
Differential revenue from further processing per batch:
Revenue from sale of Decaf Columbian:
Revenue from sale of Decaf Columbian: Revenue from sale of Columbian coffee
Revenue from sale of Columbian coffee Differential revenue:
Differential revenue:
Differential cost per batch:
Additional cost of producing Decaf Columbian: Additional cost of producing Decaf Columbian:
Differential income from further processing Decaf Columbian per batch:
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