The management of Dominican Sugar Company is considering whether to process further raw sugar into refined sugar. Refined sugar can be sold for $ 2.20 per pound, and raw sugar can be sold without further processing for $ 1.40 per pound. Raw sugar is produced in batches of 42,000 pounds by processing 100,000 pounds of sugar cane, which costs $ 0.35 per pound of cane. Refined sugar will require additional processing costs of $ 0.50 per pound of raw sugar, and 1.25 pounds of raw sugar will produce 1 pound of refined sugar.

1. Prepare a differential analysis as of March 24, 2014, to determine whether to sell raw sugar (Alternative 1) or process further into refined sugar (Alternative 2).
2. Briefly report your recommendations.

  • CreatedJune 27, 2014
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