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Kosakowski Corporation processes sugar beets in batches. A batch of sugar beets

ID: 2402254 • Letter: K

Question

Kosakowski Corporation processes sugar beets in batches. A batch of sugar beets costs $69 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 $26 or processed further for $16 to make the end product, industrial fiber that is sold for $42. The beet juice can be sold as is for $45 or processed further for $23 to make the end product, refined sugar that is sold for $90. How much more profit (loss) does the company make by processing one batch of sugar beets into the end products industrial fiber and refined sugar? o $18 $(125) O $(25)

Explanation / Answer

Answer

If processed further

Beet Fibre

Beet Juice

Total

A

Sales

$                                     42.00

$                      90.00

$                           132.00

B

Further processing cost

$                                     16.00

$                       23.00

$                             39.00

C = $ 69 + $ 17

Cost already incurred

$                             86.00

D = A - B - C

Profit (Loss) at this stage

$                                7.00

If processed further

Beet Fibre

Beet Juice

Total

A

Sales

$                                     42.00

$                      90.00

$                           132.00

B

Further processing cost

$                                     16.00

$                       23.00

$                             39.00

C = $ 69 + $ 17

Cost already incurred

$                             86.00

D = A - B - C

Profit (Loss) at this stage

$                                7.00