Wehn Refiners Inc. , processes sugar cane that it purchases from farmers.Sugar cane is processed in batches.A batch of sugar cane costs $40 to buy from farmers and $13 to crush in the company's plant.Two intermediate products, cane fiber and cane juice, emerge from the crushing process.The cane fiber can be sold as is for $28 or processed further for $18 to make the end product industrial fiber that is sold for $37.The cane juice can be sold as is for $31 or processed further for $25 to make the end product molasses that is sold for $66. Which of the intermediate products should be processed further?
A)Cane fiber should NOT be processed into industrial fiber;Cane juice should be processed into molasses
B)Cane fiber should NOT be processed into industrial fiber;Cane juice should NOT be processed into molasses
C)Cane fiber should be processed into industrial fiber;Cane juice should NOT be processed into molasses
D)Cane fiber should be processed into industrial fiber;Cane juice should be processed into molasses

Question

Quizplus · Accepted Answer

The additional profit from processing cane fiber into industrial fiber is $37 - $28 - $18 = -$9, so it should not be processed further. The additional profit from processing cane juice into molasses is $66 - $31 - $25 = $10, so it should be processed further.