Question

Coakley Beet Processors, Inc., processes sugar beets in batches. A batch of sugar beets costs $56 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 $32 or processed further for $24 to make the end product industrial fiber that is sold for $44. The beet juice can be sold as is for $52 or processed further for $32 to make the end product refined sugar that is sold for $78. How much profit (loss) does the company make by processing the intermediate product beet juice into refined sugar rather than selling it as is?
a. $(6)
b. $(12)
c. $(39)
d. $(60)

Answer 1

Answer:

The answer is A. $ 6

Explanation:

If the beet juice is sold as is:

Selling price: $52

Costs: $56 + $18 = $74

Loss: $(22)

If beet juice is processed into sugar and sold:

Selling price: $78

Costs: $56+ $18+ 32= $106

Loss:($28)

Therefore there is an additional $6 loss.