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 the intermediate product cane juice into molasses rather than selling it as is?
A) ($27)
B) ($74)
C) $20
D) $2

Question

Quizplus · Accepted Answer

The profit from processing cane juice into molasses is calculated as follows: Selling price of molasses ($88) minus the selling price of cane juice ($47) minus the additional processing cost ($21) equals $20.