Question
In: Accounting
Sell or Process Further Zing Coffee Company produces Columbian coffee in batches of 5,800 pounds. The...
Sell or Process Further
Zing Coffee Company produces Columbian coffee in batches of 5,800 pounds. The standard quantity of materials required in the process is 5,800 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 $12,542 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 | $ | $ | $ |
| Costs | |||
| Income (Loss) | $ | $ | $ |
b. Should Zing 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 two
decimal places.
$ per pound
Solutions
ekkarill92 answered 1 year agoRelated Solutions
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costs beyond the split-off point were as follows: overs, $18,000;
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Required:
1.
Allocate the $60,000 joint costs using the estimated...
In a decision to sell or to process further, of what relevance are costs incurred prior...
In a decision to sell or to process further, of what relevance
are costs incurred prior to the decision point? Explain your
answer.
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