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is CengageNOWv2lOnline ×Ye chegg study | Guided S/X -> d v2.cengagenow.com/ilrn/ta takeAssignmentMain.do?invoker= assignments&t; n Locator= assignment-take&inprogress-false; Chapter 10 Assignment Print Item Sell or Process Further Rise Shine Coffee Company produces Columber coffee in bstc es of 7 000 pounds. The st derd Quantity of enals required n the proce557,000 pounds which cost $6 per pound. Columbian coffee can be sold without further process' g for $8.4 per pound. Columbian coffee can also be processed the to yield Decaf Columbian hich can be sold for $10 per pou d. The processing into Decaf Columbian requres additional p ocess ng costs of 59,050 per batch The 8ddito el processing will also cause 8 4% 55 o product due to evaporation. a. Prepare a differential analysis dated October 6 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 Deaf Columbian (Alt. 2) Sall Raguan into Dacaf Columbian Effact on Income Atermative 2) Altarnativa 1) (Altemativa 2 Income (Loss) b. Should Rise N' Shine sal Columbian coffae or process further and sall Decaf Columbian? . Determine the price of Decaf Columbian that would cause neither an advantage nor a disadvantage for processing further and selling Decaf Columbian. Round your answer to two decmal places par pound Check My Work 2 more Cheok My Work uses remaining. Previous Next ssignment Score: 17.90% All work saved. save and Exit Submit Assignment for Grading O Type here to search 3:18 PM 12/12/2017Explanation / Answer
Answer a
Diffecential Analysis
Revenues :For Columbian = (7,000 pounds * $8.40).
For Decaf = [(7,000 pounds - 4 %) * $10)].
Cost :
For Columbian = (7000 pounds * $6)
For Decaf = (7000 pounds * $6) + $9,050
Answer b
Rise N Shine should sell Columbian coffee
Explanation : Since the differential cost of futher process to Decaf exceeds the differential revenue of futher processing resulting in loss of ($650) thus it is advisable not to go for futher processing intead sell the columbian coffee.
Answer c
Note : Selling price of Decaf Columbian that would cause neither an advantage or disadvantage means there must be no profit no loss . For this the present selling price per pound of Decaf shall increse to the extent to cover the differential loss from processing.
Price of Decaf = $10 + [ $650 / (7,000 * 96 %)] = $10.10 per pound.
Sell Regular Columbian (Alternative 1) ($) Process further into Decaf Columbian. (Alternative 2 ) ($) Diffecential effect on income. (Alternative 2 ) ($)Revenues :For Columbian = (7,000 pounds * $8.40).
For Decaf = [(7,000 pounds - 4 %) * $10)].
58,800 67,200 8,400Cost :
For Columbian = (7000 pounds * $6)
For Decaf = (7000 pounds * $6) + $9,050
42,000 51,050 9,050 Income (loss) 16,800 16,150 (650)Related Questions
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