Question
Rise N Shine Coffee Company produces Columbia coffee in batches of 6,000 pounds. The standard quality of materials required in the process is 6,000 pounds,
Rise N Shine Coffee Company produces Columbia coffee in batches of 6,000 pounds. The standard quality of materials required in the process is 6,000 pounds, which cost $5.50 per pound. Columbia coffee can be sold without further processing for $9.22 per pound. Columbia coffee can also be processed further to yield Decal Columbia, which can be sold for $11.88 per pound. The processing into Decaf Columbia requires additional processing costs of $10,230 per batch. The additional processing will also cause a 5% loss of product due to evaporation.
Prepare a differential analysis dated October 6 on whether to sell regular Columbia (Alternative 1) or process further into Decaf Columbian (Alternative 2).
Should Rise N Shine sell Columbia coffee or process further and sell Decaf Columbian?
Determine the price of Decaf Columbia that would cause neither an advantage nor a disadvantage for processing further and selling Decaf Columbian.
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