EX $25-12$ Sell or process further

Obj. $1$

Dakota Coffee Company produces Columbian coffee in batches of $7,500$ pounds. The standard quantity of materials required in the process is $7,500$ pounds, which cost $$6\mathrm{.}00$ per pound. Columbian coffee can be sold without further processing for $$9\mathrm{.}80$ per pound. Columbian coffee can also be processed further to yield Decaf Columbian, which can be sold for $$11\mathrm{.}60$ per pound. The processing into Decaf Columbian requires additional processing costs of $$6,300$ per batch. The additional processing will also cause a $5\%$ loss of product due to evaporation.

a$.$ Prepare a differential analysis dated December $11$ on whether to sell regular Columbian $($Alternative $1)$ or process further into Decaf Columbian $($Alternative $2).$

b$.$ Should Dakota Coffee Company sell Columbian coffee or process further and sell Decaf Columbian? Explain.

c$.$ Determine the price of Decaf Columbian that would cause neither an advantage nor a disadvantage for processing further and selling Decaf Columbian.