Hayase Corporation processes sugar beets that it purchases from farmers. Sugar beets are processed in batches. A batch of sugar beets costs $35 to buy from farmers and $14 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 $27 or processed further for $11 to make the end product industrial fiber that is sold for $40. The beet juice can be sold as is for $36 or processed further for $21 to make the end product refined sugar that is sold for $46.
-Which of the intermediate products should be processed further?
A) beet fiber should NOT be processed into industrial fiber; beet juice should NOT be processed into refined sugar
B) beet fiber should be processed into industrial fiber; beet juice should be processed into refined sugar
C) beet fiber should be processed into industrial fiber; beet juice should NOT be processed into refined sugar
D) beet fiber should NOT be processed into industrial fiber; beet juice should be processed into refined sugar

Question

Quizplus · Accepted Answer

Beet fiber should be processed further because the additional revenue ($40 - $27 = $13) exceeds the additional cost ($11). Beet juice should not be processed further because the additional revenue ($46 - $36 = $10) is less than the additional cost ($21).

Hayase Corporation Processes Sugar Beets That It Purchases from Farmers