Sell or Process Further

Dakota Coffee Company produces Columbian coffee in batches of 7,500 pounds. The standard quantity of materials required in the process is 7,500 pounds, which cost $6.00 per pound. Columbian coffee can be sold without further processing for $9.80 per pound. Columbian coffee can also be processed further to yield Decaf Columbian, which can be sold for $11.60 per pound. The processing into Decaf Columbian requires additional processing costs of $6,300 per batch. The additional processing will also cause a 5% loss of product due to evaporation.

a. Prepare a differential analysis dated December 11 on whether to sell regular Columbian (Alternative 1) or process further into Decaf Columbian (Alternative 2). If required, use a minus sign to indicate a loss.

Differential Analysis
Sell Regular (Alt. 1) or Process Further into Decaf (Alt. 2)
December 11
	Sell Regular (Alternative 1)	Process Further into Decaf (Alternative 2)	Differential Effects (Alternative 2)
Revenues	$fill in the blank 0379f2062fe2fa8_1	$fill in the blank 0379f2062fe2fa8_2	$fill in the blank 0379f2062fe2fa8_3
Costs	fill in the blank 0379f2062fe2fa8_4	fill in the blank 0379f2062fe2fa8_5	fill in the blank 0379f2062fe2fa8_6
Profit (Loss)	$fill in the blank 0379f2062fe2fa8_7	$fill in the blank 0379f2062fe2fa8_8	$fill in the blank 0379f2062fe2fa8_9

b. Should Dakota Coffee Company sell Columbian coffee or process further and sell Decaf Columbian?

c. Determine the price of Decaf Columbian that would cause neither an advantage nor a disadvantage for processing further and selling Decaf Columbian. Round your answer to two decimal places. $fill in the blank cade2601f01c054_2 per pound