Discuss process further raw sugar into refined sugar

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The management of Dominican Sugar Company is considering whether to process further raw sugar into refined sugar. Refined sugar can be sold for $2.20 per pound, and raw sugar can be sold without further processing for $1.40 per pound. Raw sugar is produced in batches of 42,000 pounds by processing 100,000 pounds of sugar cane, which costs $0.35 per pound of cane. Refined sugar will require additional processing costs of $0.50 per pound of raw sugar, and 1.25 pounds of raw sugar will produce 1 pound of refined sugar.

Differential Analysis

Sell Raw Sugar (Alternative 1) or Process Further into Refined Sugar (Alternative 2)

March 24

1   Sell Raw Sugar Process Further into Refined Sugar Differential Effect on Income
2   (Alternative 1) (Alternative 2) (Alternative 2)
3

?Revenues, per batch

58800?

   
4

?Costs, per batch

-35000?

   
5

?Income (Loss), per batch

23800?

Reference no: EM131788538

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