Sohr Corporation processes sugar beets that it purchases from farmers. Sugar bee

Question

Sohr Corporation processes sugar beets that it purchases from farmers. Sugar beets are processed in batches. A batch of sugar beets costs $46 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 $54. The beet juice can be sold as is for $37 or processed further for $19 to make the end product refined sugar that is sold for $54. 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? $(63) $(2) $(31) $(17)

Explanation / Answer

$46 purchased + 11$ to crush ::::>> Total cost = $46+$11$=57$

Now we get:

beet fiber : (16$)
beet juice : (37$) Total prices if not refined=16+37=$53

If we refined both then:

Product Cost Refined Cost Sold At If refined cost profit of refining

beet fiber: 16$ 15$ 54$ ($16+$15=$31 ) ($54-$31=$23) profit   

beet juice: 37$ 19$ 54$   ($37+$19=$56 )    ($54-$56=$-2) loss   

Total profit if refine sugar and Fibre

=sold price - Total Cost(including purchaes+crushing+refining of both products)

=($54 + $54) - ($46 + $11 + $15 + $19)

=$108 - $91

=17$

Total profit if refine Fibre and does not refine sugar

=sold price - Total Cost(including purchaes+crushing+refining fibre)

=($54 + $37) - ($46 + $11 + $15 )

=$91 - $72

=$19

So, Total loss due to refining = $17 - $19 = $2

option (b) is correct

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