Financial and Managerial Accounting: E25-11 Seattle Roast Coffee Company produces Colombian coffee

Financial and Managerial Accounting

E25-11.
Seattle Roast Coffee Company produces Colombian coffee in batches of 8,000 pounds. The standard quantity of materials required in the process is 8,000 pounds,which cost $5.00 per pound. Colombian coffee can be sold without further processing for $10.80 per pound. Colombian coffee can also be processed further to yield Decaf Colombian, which can be sold for $12.50 per pound.The processing into Decaf Colombian requires additional processing costs of $10,500 per batch. The additional processing will also cause a 5% loss of product due to evaporation.

a. Prepare a differential analysis report for the decision to sell or process further.
b. Should Seattle Roast sell Colombian coffee or process further and sell Decaf Colombian?
c. Determine the price of Decaf Colombian that would cause neither an advantage or disadvantage for processing further and selling Decaf Colombian.
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