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 $2.06 per pound, and raw sugar can be sold without further processing for $1.15 per pound. Raw sugar is produced in batches of 37,200 pounds by processing 93,000 pounds of sugar cane, which costs $0.29 per pound of cane. Refined sugar will require additional processing costs of $0.43 per pound of raw sugar, and 1.20 pounds of raw sugar will produce 1 pound of refined sugar.

Required:

Question Content Area

1. 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). If required, do not round interim calculations. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Differential Analysis Sell Raw Sugar (Alt. 1) or Process Further into Refined Sugar (Alt. 2) March 24

	Sell Raw Sugar (Alternative 1)	Process Further into Refined Sugar (Alternative 2)	Differential Effects (Alternative 2)
Revenues, per batch	$fill in the blank db70d0077fe2fe0_1	$fill in the blank db70d0077fe2fe0_2	$fill in the blank db70d0077fe2fe0_3
Costs, per batch	fill in the blank db70d0077fe2fe0_4	fill in the blank db70d0077fe2fe0_5	fill in the blank db70d0077fe2fe0_6
Profit (loss), per batch	$fill in the blank db70d0077fe2fe0_7	$fill in the blank db70d0077fe2fe0_8	$fill in the blank db70d0077fe2fe0_9

Question Content Area

2. Dominican Sugar Company

shouldshould not

process raw sugar further to produce refined sugar, because profits would be

increasedreduced

.