M Van Buren Company processes sugar beets in batches. A batch of sugar beets cos
ID: 2526390 • Letter: M
Question
M Van Buren Company processes sugar beets in batches. A batch of sugar beets costs $38 to buy from farmers and $12 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 $22 or processed further for $14 to make the end product industrial fiber that is sold for $34. The beet juice can be sold as is for $42 or processed further for $36 to make the end product refined sugar that is sold for $72. 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?
a. $(16)
b. $(6)
c. $(60)
d. $(29)
M Van Buren Company processes sugar beets in batches. A batch of sugar beets costs $38 to buy from farmers and $12 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 $22 or processed further for $14 to make the end product industrial fiber that is sold for $34. The beet juice can be sold as is for $42 or processed further for $36 to make the end product refined sugar that is sold for $72. 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?
a. $(16)
b. $(6)
c. $(60)
d. $(29)
Explanation / Answer
Incremental analysis :
so answer is b) $(6)
Sale price after further processing 72 Sale price as is 42 Incremental sale price 30 Less: Incremental cost -36 Incremental profit (loss) (6)Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.