Financial and Managerial Accounting: P24-4A Delta Sugar Company

Financial and Managerial Accounting

PROBLEM 24-4A Differential analysis report for further processing
The management of Delta Sugar Company is considering whether to process further raw sugar into refined sugar. Refined sugar can be sold for $1.75 per pound, and raw sugar can be sold without further processing for $1.05 per pound. Raw sugar is produced in batches of 24,000 pounds by processing 90,000 pounds of sugar cane, which costs $0.25 per pound. Refined sugar will require additional processing costs of $0.36 per pound of raw sugar, and 1.2 pounds of raw sugar will produce 1 pound of refined sugar.

1. Prepare a report as of August 30, 2008, presenting a differential analysis of the further processing of raw sugar to produce refined sugar.
2. Briefly report your recommendations.
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