Sell or Process Further

Abica Coffee Company produces Columbian coffee in batches of $5,900$ pounds. The standard quantity of materials required in the process is $5,900$ pounds, which cost $$4\mathrm{.}00$ per pound. Columbian coffee can be sold without further processing for $$8\mathrm{.}40$ per pound. Columbian coffee can also be processed further to yield Decaf Columbia which can be sold for $$12\mathrm{.}00$ per pound. The processing into Decaf Columbian requires additional processing costs of $$10,050$ per batch. The additional processing will also cause a $4\%$ loss of product due to evaporation.

a$.$ Prepare a differential analysis report for the decision to sell or process further.

Abica Coffee Company

Process Columbian Coffee Further Differential Analysis Report

Differential revenue from further processing per batch:

Differential revenue

Differential cost per batch:

Additional cost of producing Decaf Columbian

$

Differential income from further processing Decaf Columbian per batch $$

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$$ Check My Work

a$.$ Follow Exhibit $10$ in the text. For both products,'subtract the costs from the revenues. Determine the differential effect on the revenues, costs, and income $($loss$).$