FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Sell or Process Further
Zing Coffee Company produces Columbian coffee in batches of 5,600 pounds. The standard quantity of materials required in the process is 5,600
pounds, which cost $5.00 per pound. Columbian coffee can be sold without further processing for $8.40 per pound. Columbian coffee can also be
processed further to yield Decaf Columbian, which can be sold for $12.00 per pound. The processing into Decaf Columbian requires additional
processing costs of $12,650 per batch. The additional processing will also cause a 4% loss of product due to evaporation.
a. Prepare a differential analysis report for the decision to sell or process further.
Zing Coffee Company
Proposal to Process Columbian Coffee Further
Differential Analysis Report
Differential revenue from further processing per batch:
Revenue from sale of Decaf Columbian
<
Revenue from sale of Columbian coffee
Differential revenue
Differential cost per batch:
Additional cost of producing Decaf Columbian
Differential income from further processing Decaf Columbian per batch
Feedback
000
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Transcribed Image Text:Sell or Process Further Zing Coffee Company produces Columbian coffee in batches of 5,600 pounds. The standard quantity of materials required in the process is 5,600 pounds, which cost $5.00 per pound. Columbian coffee can be sold without further processing for $8.40 per pound. Columbian coffee can also be processed further to yield Decaf Columbian, which can be sold for $12.00 per pound. The processing into Decaf Columbian requires additional processing costs of $12,650 per batch. The additional processing will also cause a 4% loss of product due to evaporation. a. Prepare a differential analysis report for the decision to sell or process further. Zing Coffee Company Proposal to Process Columbian Coffee Further Differential Analysis Report Differential revenue from further processing per batch: Revenue from sale of Decaf Columbian < Revenue from sale of Columbian coffee Differential revenue Differential cost per batch: Additional cost of producing Decaf Columbian Differential income from further processing Decaf Columbian per batch Feedback 000
Zing Coffee Company
Proposal to Process Columbian Coffee Further
Differential Analysis Report
Differential revenue from further processing per batch:
Revenue from sale of Decaf Columbian
Revenue from sale of Columbian coffee
Differential revenue
Differential cost per batch:
Additional cost of producing Decaf Columbian
Differential income from further processing Decaf Columbian per batch
Feedback
Check My Work
a. Follow Exhibit 10 in the text. For both products, subtract the costs from the revenues. Determine the differential effect on the
revenues, costs, and income (loss).
b. Should Zing Coffee sell Columbian coffee or process further and sell Decaf Columbian?
Yes, process further and sell 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 the nearest cent.
per pound
expand button
Transcribed Image Text:Zing Coffee Company Proposal to Process Columbian Coffee Further Differential Analysis Report Differential revenue from further processing per batch: Revenue from sale of Decaf Columbian Revenue from sale of Columbian coffee Differential revenue Differential cost per batch: Additional cost of producing Decaf Columbian Differential income from further processing Decaf Columbian per batch Feedback Check My Work a. Follow Exhibit 10 in the text. For both products, subtract the costs from the revenues. Determine the differential effect on the revenues, costs, and income (loss). b. Should Zing Coffee sell Columbian coffee or process further and sell Decaf Columbian? Yes, process further and sell 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 the nearest cent. per pound
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