14. Wyoming Beet Processors Inc., processes sugar beets in batches. A batch of s

Question

14. Wyoming Beet Processors Inc., processes sugar beets in batches. A batch of sugar beets costs $27 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 $27 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 $32 or processed further for $29 to make the end product refined sugar that is sold for $58. 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. $(47) B. $(20) C. $(3) D. S(25) Nebraska Corporation processes sugar cane in batches. The company purchases a batch of sugar cane for $53 from farmers and then crushes the cane in the company's plant at the cost of $15. Two intermediate products, cane fiber and cane juice, emerge from the crushing process. The cane fiber can be sold as is for $24 or processed further for $18 to make the end product industrial fiber that is sold for $40. The cane juice can be sold as is for $41 or processed further for S25 to make the end product molasses that is sold for $72. Which of the intermediate products should be processed further? A. Cane fiber should be processed into industrial fiber, Cane juice should be processed into 15. B. Cane fiber should NOT be processed into industrial fiber; Cane juice should NOT be processed C. Cane fiber should be processed into industrial fiber, Cane juice should NOT be processed into D. Cane fiber should NOT be processed into industrial fiber, Cane juice should be processed into molasses into molasses molasses molasses

Explanation / Answer

Solution:

14) Calculation of the Profit (Loss) Does the Company make by Processing the Intermediate Product Beet Juice into Refined Sugar Rather than Selling it as is:

Right Option is C. ($3)

15) Determining the Intermediate Products that should be Processed Further:

Right Option is D. Cane fiber should NOT be processed into industrial fiber; Cane juice should be processed into molasses.

Refined Sugar Final sales value after further processing $58 Less: Sales value at split-off point $32 Incremental revenue from further processing $26 Less: Cost of further processing $29 Profit (loss) from further processing ($3)

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