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Carvalho Canning Inc. processes sugar cane into refined sugar at a processing cost of $10,300 per batch. Carvalho Canning Inc. can sell the refined sugar
Carvalho Canning Inc. processes sugar cane into refined sugar at a processing cost of $10,300 per batch. Carvalho Canning Inc. can sell the refined sugar as is, or it can process it further to be used in drink mixes or assorted candies. Once processed, each batch of refined sugar would result in the following sales revenue: Carvalho Canning Inc. Refined Sugar $16,200 Drink Mixes $103,000 Assorted Candies $227,900 The cost of transforming the refined sugar into drink mixes would be $72,300. Likewise, the company would incur a cost of $173,500 to transform the sugar into assorted candies. The company president has decided to make the assorted candies due to their high sales value and to the fact that the sugar processing costs eats up most of refined sugar profits. Show the cost differential for both processing options and determine if the president made the righ decision. Sell as is: Expected revenue $16,200 Additional processing costs $10,300 Total Net Revenue $5,900 Process into Assorted Candies: Sell Process Further Difference Expected revenue Additional processing costs Total Net Revenue Process into Drink Mixes Sell Process Further Difference Expected revenue Additional processing costs Total Net Revenue The company should Select an
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