Question

Boney Corporation processes sugar beets that it purchases from farmers. Sugar beets are processed in batches. A batch of sugar beets costs $62 to buy from farmers and $21 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 $32 or processed further for $33 to make the end product industrial fiber that is sold for $81. The beet juice can be sold as is for $53 or processed further for $37 to make the end product refined sugar that is sold for $81. What is the financial advantage (disadvantage) for the company from processing one batch of sugar beets into the end products industrial fiber and refined sugar rather than not processing that batch at all?

Answer 1

The financial advantage for the company from processing one batch of sugar beets into the end products industrial fiber and refined sugar rather than not processing that batch at all

Particulars	Amount ($)
Total combined sales value [$81.00 + $81.00]	162.00
Less: Total further processing costs [$33.00 + $37.00]	70.00
Less: Sugar beets costs [$62.00]	62.00
Less: Crushing cost [$21.00]	21.00
Net financial advantage	9.00

“Hence, the financial advantage for the company will be $9.00 per batch”