Question

Beets Corporation processes sugar beets in batches that it purchases from farmers for $25 a batch. A batch of sugar beets costs $6 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 $19 or processed further for $38 to make the end product industrial fiber that is sold for $55. The beet juice can be sold as is for $31 or processed further for $12 to make the end product refined sugar that is sold for $49. Which of the intermediate products should be processed further? beet fiber should be processed into industrial fiber; beet juice should be processed into refined sugar beet fiber should NOT be processed into industrial fiber; beet juice should NOT be processed into refined sugar beet fiber should NOT be processed into industrial fiber; beet juice should be processed into refined sugar beet fiber should be processed into industrial fiber; beet juice should NOT be processed into refined sugar

Answer 1

OPTION: beet fiber should NOT be processed into industrial fiber; beet juice should be processed into refined sugar

EXPLANATION:

for beet fiber,

benefit (loss) = additional sales - additional costs

= ($55 - $19) - $38

= -$2 loss

for beet juice,

benefit (loss) = additional sales - additional costs

= ($49 - $31) - $12

= $6 benefit