Coakley Beet Processors, Inc., processes sugar beets in batches. A batch of suga

Question

Coakley Beet Processors, Inc., processes sugar beets in batches. A batch of sugar beets costs $43 to buy from farmers and $17 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 $19 or processed further for $11 to make the end product industrial fiber that is sold for $31. The beet juice can be sold as is for $39 or processed further for $41 to make the end product refined sugar that is sold for $77. 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.$(14)

B.$(3)

C.$(60)

D.$(26)

Coakley Beet Processors, Inc., processes sugar beets in batches. A batch of sugar beets costs $43 to buy from farmers and $17 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 $19 or processed further for $11 to make the end product industrial fiber that is sold for $31. The beet juice can be sold as is for $39 or processed further for $41 to make the end product refined sugar that is sold for $77. How much profit (loss) does the company make by processing the intermediate product beet juice into refined sugar rather than selling it as is?

Explanation / Answer

The correct answer is B. $ (3)

Beet Juice: To sell now or to process further

Sell now Process further Selling price per unit $ 39 $ 77 Additional processing costs - $ 41 $ 39 $ 36 Incremental profit / (loss) $ (3)

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