MacKey Beet Processors, Inc., processes sugar beets in batches. A batch of sugar

Question

MacKey Beet Processors, Inc., processes sugar beets in batches. A batch of sugar beets costs $48 to buy from farmers and $10 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 $16 to make the end product industrial fiber that is sold for $36. The beet juice can be sold as is for $42 or processed further for $30 to make the end product refined sugar that is sold for $60. How much profit (loss) does the company make by processing the intermediate product beet juice into refined sugar rather than selling it as is?

$(31)

Explanation / Answer

Calculate profit (loss) processing further beet juice to refined sugar :

so answer is d) $(12)

Sales revenue after further processing 60 Sales as is (42) Incremental revenue 18 Less: Incemental cost (30) Incremental loss (12)

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