Boney Corporation processes sugar beets that it purchases from farmers. Sugar beets are processed in batches. A batch of sugar beets costs $53 to buy from farmers and $18 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 $25 or processed further for $18 to make the end product industrial fiber that is sold for $39. The beet juice can be sold as is for $32 or processed further for $28 to make the end product refined sugar that is sold for $79.What is the financial advantage (disadvantage) for the company from processing the intermediate product beet juice into refined sugar rather than selling it as is?

A) $1 per batch
B) ($17) per batch
C) $19 per batch
D) ($52) per batch

Question

Tatiana Audain · Accepted Answer

Final Answer : C, Explanation :  The financial advantage of processing beet juice into refined sugar is calculated as the difference between the selling price of refined sugar ($79) and the sum of its processing cost ($28) and the selling price of beet juice as is ($32). This results in a $79 - ($28 + $32) = $79 - $60 = $19 per batch advantage.

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