The management of Delta Sugar Company is considering whether toprocess further raw sugar into refined sugar. Refined sugarcan be sold for $1.75 per pound, and raw sugar can be sold withoutfurther processing for $1.05 per pound. Raw sugar is producedin batches of 24,000 pounds by processing 90,000 pounds of sugarcane, which costs $0.25 per pound. Refined sugar will requireadditional processing costs of $0.36 per pound of raw sugar, and1.2 pounds of raw sugar will produce 1 pound of refined sugar.
Instructions:
- Prepare a report as of August 30, 2008,presenting a differential analysis of the further processing of rawsugar to produce refined sugar.
- Briefly report your recommendations