Differential Analysis for Further Processing

The management of Dominican Sugar Company is considering whether to process further raw sugar into refined sugar. Refined sugar can be sold for $$2\mathrm{.}20$ per pound, and raw sugar can be sold without further processing for $$1\mathrm{.}40$ per pound. Raw sugar is produced in batches of $42,000$ pounds by processing $100,000$ pounds of sugar cane, which costs $$0\mathrm{.}35$ per pound of cane. Refined sugar will require additional processing costs of $$0\mathrm{.}50$ per pound of raw sugar, and $1\mathrm{.}25$ pounds of raw sugar will produce $1$ pound of refined sugar.

Required:

Prepare a differential analysis as of March $24$ to determine whether to sell raw sugar $($Alternative $1)$ or process further into refined sugar $($Alternative $2).$

Differential Analysis

Sell Raw Sugar $($Alt$.1)$ or Process Further into Refined Sugar $($Alt$.2)$

March $24$

Revenues, per batch

Cost, per batch

Profit $($loss$)$ per batch