8) Palinkas Cane Products Inc., processes sugar cane in batches. The company buy

Question

8) Palinkas Cane Products Inc., processes sugar cane in batches. The company buys a batch of sugar cane from farmers for $80 which is then crushed in the company's plant at a cost of $11. Two intermediate products, cane fiber and cane juice, emerge from the crushing process. The cane fiber can be sold as is for $22 or processed further for $10 to make the end product industrial fiber that is sold for $30. The cane juice can be sold as is for $41 or processed further for $27 to make the end product molasses that is sold for S101. How much more profit (loss) does the company make by processing one batch of sugar cane into the end products industrial fiber and molasses? A) (S128) B) $3 C) ($28) D) S31

Explanation / Answer

Total revenues = Revenues from industrial fiber + Revenues from molasses

= 30 + 101

= 131

Total costs = Raw material + processing costs + further processing costs of canefiber + further processing costs of canejuice

= 80 + 11 + 10 + 27

= 128

Pofit = Total revenues - Total costs

= 131 - 128

= 3

The answer is B

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