Golden Roast Coffee Company produces Columbian coffee in batches of 7,700 pounds. The standard quantity of materials
Question:
Golden Roast Coffee Company produces Columbian coffee in batches of 7,700 pounds. The standard quantity of materials required in the process is 7,700 pounds, which cost $5.00 per pound. Columbian coffee can be sold without further processing for $8.90 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 $18,326 per batch. The additional processing will also cause a 6% loss of product due to evaporation.
a. Prepare a differential analysis report for the decision to sell or process further.
b. Should Golden Roast sell Columbian coffee or process further and sell Decaf Columbian?
c. Determine the price of Decaf Columbian that would cause neither an advantage or disadvantage for processing further and selling Decaf Columbian.
Step by Step Answer:
Accounting
ISBN: 978-0324401844
22nd Edition
Authors: Carl S. Warren, James M. Reeve, Jonathan E. Duchac