Abica Coffee Company produces Columbian coffee in batches of 5,900 pounds. The s

ID: 2522234 • Letter: A

Question

Abica Coffee Company produces Columbian coffee in batches of 5,900 pounds. The standard quantity of materials required in the process is 5,900 pounds, which cost $4.00 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 $11.00 per pound. The processing into Decaf Columbian requires additional processing costs of $12,450 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.

_______________________________ $

The options (Additional cost of producing Decaf Columbian, Decaf Columbian per batch, Differential revenue, Revenue from sale of Columbian coffee, Revenue from sale of Decaf Columbian)

_______________________________ S

The Options ( Differential income from further processing Decaf Columbian per batch, Differential loss from further processing Decaf Columbian per batch)

b. Should Abica Coffee sell Columbian coffee or 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

please I want accurate answer that include the numbers above

Abica Coffee Company Proposal to Process Columbian Coffee Further Differential Analysis Report Differential revenue from further processing per batch: ________________________________ $

_______________________________ $

The options ( Additional cost of producing Decaf Columbian, Decaf Columbian per batch, Differential revenue, Revenue from sale of Columbian coffee) $ Differential cost per batch: ________________________________ $

The options (Additional cost of producing Decaf Columbian, Decaf Columbian per batch, Differential revenue, Revenue from sale of Columbian coffee, Revenue from sale of Decaf Columbian)

_______________________________ S

The Options ( Differential income from further processing Decaf Columbian per batch, Differential loss from further processing Decaf Columbian per batch)

Explanation / Answer

Columbian Coffee without processing can be sold for $8.4 / pound

So revenue = 5,900 x 4 = $49,560

Columbian coffee after processing can be sold for $11 / pound

there will be loss of 4% of quantity so left will be 96% of 5900 = 5,664 pounds

Revenue = 5,664 x 11 = $62,304

Differential Revenue = $62,304 - $49,560 = $12,744

Differential cost is to carry out the process costing $12,450

Net Revenue = $12,744 - $12,450 = $294

answer to part B. is that the Abica Coffee should process further and sell Decaf Columbian as it will earn it $294 more.

Answer to part c.

The difference part is $294 which the company is earning more, so the price has to fell by 294/5664 = $0.052 / pound to earn same revenue so that there is no advantage or disadvantage.

new price will be $11 - $0.052 = $10.948 / pound

Abica Coffee Company Proposal to Process Columbian Coffee Further Differential Analysis Report