Question
Zing Roast Coffee Company produces Columbian coffee in batches of 5,400 pounds. The standard quantity of materials required in the process is 5,400 pounds, which
Zing Roast Coffee Company produces Columbian coffee in batches of 5,400 pounds. The standard quantity of materials required in the process is 5,400 pounds, which cost $5.00 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 $10,150 per batch. The additional processing will also cause a 4% loss of product due to evaporation.
a. Prepare a differential analysis dated August 28, 2014, on whether to sell regular Columbian (Alternative 1) or process further into Decaf Columbian (Alternative 2). Differential Analysis Sell Regular Columbian (Alt 1)or Process Further into Decaf Columbian (Alt 2) August 28, 2014 Sell Regular Columbian (Alternative 1) Further into Process Decaf Columbian (Alternative 2 Differential Effec on Income (Alternative 2 Revenues Costs Income (Loss)Step by Step Solution
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