Determine the price of decaf columbian that would cause

Reference no: EM131975373

Problem

Sell or Process Further

Zing Roast 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 $4.00 per pound. Columbian coffee can be sold without further processing for $9.40 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 $9,050 per batch. The additional processing will also cause a 5% loss of product due to evaporation.

a. Prepare a differential analysis dated August 28, 2014, on whether to sell regular Columbian (Alternative 1) or process further into Decaf Columbian (Alternative 2).

b. Should Zing Roast 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.

Reference no: EM131975373

Questions Cloud

What is the contribution to income from selling the pounds : Bozo Inc. manufactures two products from a joint production process. What is the contribution to income from selling the 14,000 pounds of HS at split-off?

Life insurance in superannuation : If a term life insurance premium is $1000 and the client decides to pay their premium out of after-tax dollars how much pre-tax income will an individual

What is the value of the stock with a required return : A firm is expected to pay a dividend of $5.00 next year and $5.28 the following year. Financial Analysts believe the stock will be at their target price.

What should be the total overhead cost at an activity level : Akey Hospital bases its budgets on patient-visits. What should be the total overhead cost at an activity level of 3,000 patient-visits per month

Determine the price of decaf columbian that would cause : Determine the price of Decaf Columbian that would cause neither an advantage nor a disadvantage for processing further and selling Decaf Columbian.

Determine required rate of return both before and after tax : A firm finances a $40 million project by borrowing $20 million to be repaid over the life of the project and by issuing common stocks worth of $20 million.

What is the stocks beta : The expected rate of return on a Treasury Bill is 0.005, the expected rate of return on the Wilshire 5000 is 0.08 and the required rate of return of a stock

What would have been the spending variance for dye costs : In the company's flexible budget performance report for last month, what would have been the spending variance for dye costs

Determining the residual dividend model : What should Jasmine's retained earnings be under the residual dividend model?

User Account

All Pages