Abica Roast 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 $5.00per pound. Columbian coffee can be sold without further processing for $8.40 per pound.

Columbian coffee can also be processed further to yield Decaf Columbian, which can

be sold for $10.00 per pound. The processing into Decaf Columbian requires additional

processing costs of $9,450 per batch. The additional processing will also cause a 5% loss

of product due to evaporation.



Columbian coffee can be sold without further processing for $8.40 per pound.

Columbian coffee can also be processed further to yield Decaf Columbian, which can

be sold for $10.00 per pound. The processing into Decaf Columbian requires additional

processing costs of $9,450 per batch. The additional processing will also cause a 5% loss

of product due to evaporation.

a. Prepare a differential analysis dated August 28, 2012, on whether to sell regular

Columbian (Alternative 1) or process further into Decaf Columbian (Alternative 2).

b. Should Abica Roast sell Columbian coffee or process further and sell Decaf

Columbian?

c. Determine the price of Decaf Columbian that would cause neither an advantage or

disadvantage for processing further and selling Decaf Columbian.