Question

Boney Corporation processes sugar beets that it purchases from farmers. Sugar beets are processed in batches. A batch of sugar beets costs $54 to buy from farmers and $13 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 $24 or processed further for $17 to make the end product industrial fiber that is sold for $65. The beet juice can be sold as is for $45 or processed further for $21 to make the end product refined sugar that is sold for $65.

What is the financial advantage (disadvantage) for the company from processing one batch of sugar beets into the end products industrial fiber and refined sugar? Multiple Choice $(4) per batch $18 per batch $(180) per batch $28 per batch

Answer 1

Answer:

$25 per batch

Explanation:

Combined final sales value:

= Sales value of refined sugar + Sales value of industrial fiber

= $65 + $65

= $130

Financial advantage:

= Combined final sales value - Further Processing - sugar beets costs - Cost to Crush

= $130 - ($17 + $21) - $54 - $13

= $130 - $38 - $54 - $13

= $25 per batch

Therefore, the financial advantage (disadvantage) for the company from processing one batch of sugar beets into the end products industrial fiber and refined sugar is $25.