Question

Vannorman Corporation processes sugar beets in batches. A batch of sugar beets costs $78 to buy from farmers and $18 to crush in the company's plant. Two intermediate products, beet fiber and beet juice, emerge from the crushing process. The beet fiber can be sold as is for $25 or processed further for $16 to make the end product industrial fiber that is sold for $57. The beet juice can be sold as is for $39 or processed further for $22 to make the end product refined sugar that is sold for $84. How much profit (loss) does the company make by processing one batch of sugar beets into the end products industrial fiber and refined sugar?

Answer 1

Answer:

Results are below.

Step-by-step explanation:

We will take into account the differential costs only. Therefore, the costs of sugar beets and to crush them are irrelevant to decision making.

Beet fiber:

Sold as is= $25

Continue processing= 57 - 16= $41

It is more convenient to process further the beet fiber.

Beet juice:

Sold as is= $39

Continue processing= 84 - 22= $62

It is more convenient to process further the beet juice.