Abica Coffee Company produces Columbian coffee in batches of 5,600 pounds. The standard quantity of...
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Abica 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 $4.00 per pound. Columbian coffee can be sold without further processing for $7.40 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 $11,250 per batch. The additional processing will also cause a 5% loss of product due to evaporation.
Differential revenue from further processing per batch:
Revenue from sale of Decaf Columbian:
Revenue from sale of Decaf Columbian: Revenue from sale of Columbian coffee
Revenue from sale of Columbian coffee Differential revenue:
Differential revenue:
Differential cost per batch:
Additional cost of producing Decaf Columbian: Additional cost of producing Decaf Columbian:
Differential income from further processing Decaf Columbian per batch:
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