Oran Refiners, Inc., processes sugar cane that it purchases from farmers. Sugar cane is processed in batches. A batch of sugar cane costs $76 to buy from farmers and $18 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 $21 or processed further for $12 to make the end product industrial fiber that is sold for $43. The cane juice can be sold as is for $47 or processed further for $21 to make the end product molasses that is sold for $88.
-How much profit (loss) does the company make by processing one batch of sugar cane into the end products industrial fiber and molasses?
A) ($127)
B) $30
C) ($26)
D) $4

Question

Quizplus · Accepted Answer

The total cost to process one batch is $76 (purchase) + $18 (crushing) + $12 (fiber processing) + $21 (juice processing) = $127. The revenue from selling industrial fiber and molasses is $43 + $88 = $131. The profit is $131 - $127 = $4.