Sell or Process Further Zing Coffee Company produces Columbian coffee in batches of 7,000 pounds. The standard quantity of materials required in the process is 7,000 pounds, which cost $6 per pound. Columbian coffee can be sold without further processing for $9 per pound. Columbian coffee can also be processed further to yield Decaf Columbian, which can be sold for $12 per pound. The processing into Decaf Columbian requires additional processing costs of $14,539 per batch. The additional processing also causes a 5% loss of 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). For those boxes in which you must enter subtracted or negative numbers use a minus sign. Differential Analysis Sell Regular Columbian (Alt. 1) or Process Further into Decaf Columbian (Alt. 2) October 6 Sell Regular Columbian (Alternative 1) Process Further into Decaf Columbian (Alternative 2) Differential Effect on Income (Alternative 2) Revenues $fill in the blank 63e64bfe5071063_1 $fill in the blank 63e64bfe5071063_2 $fill in the blank 63e64bfe5071063_3 Costs fill in the blank 63e64bfe5071063_4 fill in the blank 63e64bfe5071063_5 fill in the blank 63e64bfe5071063_6 Income (Loss) $fill in the blank 63e64bfe5071063_7 $fill in the blank 63e64bfe5071063_8 $fill in the blank 63e64bfe5071063_9 b. Should Zing sell Columbian coffee or process further and sell Decaf Columbian? Process into Decaf Columbian c. 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 decimal places. $fill in the blank f51d92fd6ff8075_2 per pound

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Sell or Process Further

Zing Coffee Company produces Columbian coffee in batches of 7,000 pounds. The standard quantity of materials required in the process is 7,000 pounds, which cost $6 per pound. Columbian coffee can be sold without further processing for $9 per pound. Columbian coffee can also be processed further to yield Decaf Columbian, which can be sold for $12 per pound. The processing into Decaf Columbian requires additional processing costs of $14,539 per batch. The additional processing also causes a 5% loss of 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). For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Differential Analysis
Sell Regular Columbian (Alt. 1) or Process Further into Decaf Columbian (Alt. 2)
October 6
	Sell Regular Columbian (Alternative 1)	Process Further into Decaf Columbian (Alternative 2)	Differential Effect on Income (Alternative 2)
Revenues	$fill in the blank 63e64bfe5071063_1	$fill in the blank 63e64bfe5071063_2	$fill in the blank 63e64bfe5071063_3
Costs	fill in the blank 63e64bfe5071063_4	fill in the blank 63e64bfe5071063_5	fill in the blank 63e64bfe5071063_6
Income (Loss)	$fill in the blank 63e64bfe5071063_7	$fill in the blank 63e64bfe5071063_8	$fill in the blank 63e64bfe5071063_9

b. Should Zing sell Columbian coffee or process further and sell Decaf Columbian?
Process into Decaf Columbian

c. 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 decimal places.
$fill in the blank f51d92fd6ff8075_2 per pound

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b. Which alternative has the most desirable effect on income?

c. Divide the net advantage of further processing by the volume of Decaf Columbian and subtract the result from $12.

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