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 $48 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 $18 or processed further for $17 to make the end product industrial fiber that is sold for $56. The beet juice can be sold as is for $39 or processed further for $21 to make the end product refined sugar that is sold for $56.

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

$(19)

$(4)

$35

$(67)

Sohr Corporation processes sugar beets that it purchases from farmers. Sugar beets are processed in batches. A batch of sugar beets costs $48 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 $18 or processed further for $17 to make the end product industrial fiber that is sold for $56. The beet juice can be sold as is for $39 or processed further for $21 to make the end product refined sugar that is sold for $56.

Explanation / Answer

Incremental profit /(loss) =Incremental revenue -incremental cost -loss of sales revenue if sold at split off

                                           = 56 - 21 -39

                                            = - 4

correct option is "B"

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