Question
The management of Dominican Sugar Company is considering whether to process further raw sugar into refined sugar. Refined sugar can be sold for $2.08 per
The management of Dominican Sugar Company is considering whether to process further raw sugar into refined sugar. Refined sugar can be sold for $2.08 per pound, and raw sugar can be sold without further processing for $1.16 per pound. Raw sugar is produced in batches of 44,400 pounds by processing 111,000 pounds of sugar cane, which costs $0.29 per pound of cane. Refined sugar will require additional processing costs of $0.44 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.
Sell Raw Sugar (Alternative 1) | Process Further into Refined Sugar (Alternative 2) | Differential Effects (Alternative 2) | |
Revenues, per batch | $fill in the blank 43170e0c9fc1f88_1 | $fill in the blank 43170e0c9fc1f88_2 | $fill in the blank 43170e0c9fc1f88_3 |
Costs, per batch | fill in the blank 43170e0c9fc1f88_4 | fill in the blank 43170e0c9fc1f88_5 | fill in the blank 43170e0c9fc1f88_6 |
Profit (loss), per batch | $fill in the blank 43170e0c9fc1f88_7 | $fill in the blank 43170e0c9fc1f88_8 | $fill in the blank 43170e0c9fc1f88_9 |
Question Content Area
2. Dominican Sugar Company
shouldshould not
process raw sugar further to produce refined sugar, because profits would be
increasedreduced
.
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