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Process or Sell

Product J19 is produced for $11 per gallon. Product J19 can be sold without additional processing for $18 per gallon, or processed further into Product R33 at an additional cost of $7 per gallon. Product R33 can be sold for $24 per gallon.

a. Prepare a differential analysis dated April 30 on whether to sell Product J19 (Alternative 1) or process further into Product R33 (Alternative 2).

Differential Analysis
Sell Product J19 (Alt. 1) or Process Further into Product R33 (Alt. 2)
April 30
Sell Product J19 (Alternative 1) Process Further into Product R33 (Alternative 2) Differential Effect on Income (Alternative 2)
Revenues, per unit $ $ $
Costs, per unit
Income (loss), per unit $ $ $

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Tod Thiel
Tod ThielLv2
30 Sep 2019

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Sell or Process Further

Rise N’ Shine Coffee Company produces Columbian coffee in batches of 6,000 pounds. The standard quantity of materials required in the process is 6,000 pounds, which cost $6 per pound. Columbian coffee can be sold without further processing for $8.4 per pound. Columbian coffee can also be processed further to yield Decaf Columbian, which can be sold for $10 per pound. The processing into Decaf Columbian requires additional processing costs of $8,950 per batch. The additional processing will also cause 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).

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) $ $ $

Feedback

a. For both products, subtract the costs from the revenue per batch. Determine the differential effect on income of the revenues, costs, and income (loss) by subtracting alternative 2 from alternative 1.

Learning Objective 1.

b. Should Rise N’ Shine sell Columbian coffee or process further and sell Decaf Columbian?
Sell 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

Feedback

Product K is produced for $5.46 per pound. Product K can be soldwithout additional processing for $7.89 per pound or processedfurther into Product L at an additional cost of $0.80 per pound.Product L can be sold for $8.83 per pound. Required: 1. Prepare adifferential analysis dated November 15 on whether to sell ProductK (Alternative 1) or process further into Product L (Alternative2). Refer to the Amount Descriptions list provided for the exactwording of the answer choices for text entries. For those boxes inwhich you must enter subtracted or negative numbers use a minussign. If there is no amount or an amount is zero, enter “0”. Acolon (:) will automatically appear if required. 2. Should ProductK be sold (Alternative 1) or processed further into Product L(Alternative 2)?


Homestead Jeans Co.has an annual plant capacity of 65,500 units, and currentproduction is 43,000 units. Monthly fixed costs are $38,000, andvariable costs are $25 per unit. The present selling price is $37per unit. On November 12 of the current year, the company receivedan offer from Dawkins Company for 13,600 units of the product at$27 each. Dawkins Company will market the units in a foreigncountry under its own brand name. The additional business is notexpected to affect the domestic selling price or quantity of salesof Homestead Jeans Co.

a.Prepare a differential analysis dated November 12 on whether toreject (Alternative 1) or accept (Alternative 2) the Dawkins order.If an amount is zero, enter "0". For those boxes in which you mustenter subtracted or negative numbers use a minus sign.

Differential Analysis
Reject Order (Alt. 1) or Accept Order (Alt.2)
November 12
Reject Order(Alternative 1) Accept Order(Alternative 2) Differential Effecton Income (Alternative 2)
Revenues $ $ $
Costs:
Variable manufacturingcosts
Income (Loss) $ $ $

b.Having unused capacity available is to this decision. Thedifferential revenue is than the differential cost. Thus, acceptingthis additional business will result in a net .

c.What is the minimum price per unit that would produce a positivecontribution margin? Round your answer to two decimal places.

Calgary Lumber Companyincurs a cost of $392 per hundred board feet (hbf) in processingcertain “rough-cut” lumber, which it sells for $546 per hbf. Analternative is to produce a “finished cut” at a total processingcost of $529 per hbf, which can be sold for $754 per hbf.

a.Prepare a differential analysis dated March 15, on whether to sellrough-cut lumber (Alternative 1) or process further intofinished-cut lumber (Alternative 2).

Differential Analysis
Sell Rough-Cut (Alt. 1) or Process Further intoFinished-Cut (Alt. 2)
March 15
Sell Rough-Cut
(Alternative 1)		 Process Further
into Finished-Cut
(Alternative 2)		 Differential
Effect on Income
(Alternative 2)
Revenues, per unit $ $ $
Costs, per unit

Income (Loss), per unit

 $ $ $

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