Crooks Corporation processes sugar beets in batches that it purchases from farmers for $57 a batch. A batch of sugar beets costs $12 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 $28 or processed further for $17 to make the end product industrial fiber that is sold for $67. The beet juice can be sold as is for $39 or processed further for $24 to make the end product refined sugar that is sold for $54. Which of the intermediate products should be processed further?
A)beet fiber should be processed into industrial fiber; beet juice should be processed into refined sugar
B)beet fiber should be processed into industrial fiber; beet juice should NOT be processed into refined sugar
C)beet fiber should NOT be processed into industrial fiber; beet juice should be processed into refined sugar
D)beet fiber should NOT be processed into industrial fiber; beet juice should NOT be processed into refined sugar

Question

Quizplus · Accepted Answer

The additional profit from processing beet fiber into industrial fiber is $22 ($67 - $28 - $17), which is positive, so it should be processed further. The additional profit from processing beet juice into refined sugar is negative ($54 - $39 - $24 = -$9), so it should not be processed further.

Crooks Corporation Processes Sugar Beets in Batches That It Purchases