Boney Corporation processes sugar beets that it purchases from farmers. Sugar be
ID: 2535398 • Letter: B
Question
Boney Corporation processes sugar beets that it purchases from farmers. Sugar beets are processed in batches. A batch of sugar beets costs $52 to buy from farmers and $11 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 $16 or processed further for $15 to make the end product industrial fiber that is sold for $64. The beet juice can be sold as is for $47 or processed further for $19 to make the end product refined sugar that is sold for $64.
What is the financial advantage (disadvantage) for the company from processing the intermediate product beet juice into refined sugar rather than selling it as is?
Explanation / Answer
Calculate product beet juice into refined sugar or not :
(2) is the financial (disadvantage) for the company from processing the intermediate product beet juice into refined sugar rather than selling it as is.
Sale value of refined sugar 64 Sale value of beet juice 47 Incremental sale value 17 Incremental cost -19 Incremental profit (loss) -2