Chamomile Incorporated processes sugar beets that it purchases from farmers. Sug

Question

Chamomile Incorporated processes sugar beets that it purchases from farmers. Sugar beets are processed in batches. A batch of sugar beets costs $31 to buy from farmers and $15 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 $27 or processed further for $14 to make the end product industrial fiber that is sold for $44 The beet juice can be sold as is for $27 or processed further for $34 to make the end product refined sugar that is sold for $68 . How much more profit (loss) does the company make by processing the intermediate product beet juice into refined sugar rather than selling it as is?

Select one:

a. $7.00

b. $41.00

c. $34.00

d. $-7.00

Explanation / Answer

How much more profit (loss) does the company make by processing the intermediate product beet juice into refined sugar rather than selling it as is?

so answer is a) $7.00

Refined sugar sale 68 Less: Beet Juice sold (27) Incremental Revenue 41 Less: Additional cost (34) Incremental profit 7

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