Solved by verified expert :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.
