Financial and Managerial Accounting: PR25-4B The management of Caribbean Sugar Company

Financial and Managerial Accounting

The management of Caribbean Sugar Company is considering whether to process further raw sugar into refined sugar. Refined sugar can be sold for $1.90 per pound, and raw sugar can be sold without further processing for $1.10 per pound. Raw sugar is produced in batches of 27,000 pounds by processing 90,000 pounds of sugar cane,which costs $0.25 per pound. Refined sugar will require additional processing costs of $0.35 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 January 30,2010,presenting a differential analysis of the further processing of raw sugar to produce refined sugar.
2. Briefly report your recommendations.
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