Question
Sell Regular Columbian (Alt 1) Process Further in Decaf Columbian (Alt 2) Diff effect on income (Alt 2) Revenue $54,600 Costs $39,000 Income (Loss) $15,600
Sell Regular Columbian (Alt 1) | Process Further in Decaf Columbian (Alt 2) | Diff effect on income (Alt 2) | |
Revenue | $54,600 | ||
Costs | $39,000 | ||
Income (Loss) | $15,600 |
Abica Roast Coffee Company produces Columbian coffee in batches of 6,500 pounds. The standard quantity of materials required in the process is 6,500 pounds, which cost $6.00 per pound. Columbian coffee can be sold without further processing for $8.40 per pound. Columbian coffee can also be processed further to yield Decaf Columbian, which can be sold for $10.00 per pound. The processing into Decaf Columbian requires additional processing costs of $9,850 per batch. The additional processing will also cause a 6% loss of product due to evaporation.
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