Reference no: EM132687515

Problem - Differential Analysis for Further Processing

The management of Jamaican Sugar Company is considering whether to process further raw sugar into refined sugar. Refined sugar can be sold for $2.15 per pound, and raw sugar can be sold without further processing for $1.20 per pound. Raw sugar is produced in batches of 36,000 pounds by processing 90,000 pounds of sugar cane, which costs $0.30 per pound of cane. Refined sugar will require additional processing costs of $0.45 per pound of raw sugar, and 1.2 pounds of raw sugar will produce 1 pound of refined sugar.

Instructions -

1. Prepare a differential analysis as of January 30, 2012, to determine whether to sell raw sugar (Alternative 1) or process further into refined sugar (Alternative 2).

2. Briefly report your recommendations.