Boney Corporation Processes Sugar Beets That It Purchases from Farmers

question 167

Multiple Choice

Boney Corporation processes sugar beets that it purchases from farmers. Sugar beets are processed in batches. A batch of sugar beets costs $53 to buy from farmers and $18 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 $25 or processed further for $18 to make the end product industrial fiber that is sold for $39. The beet juice can be sold as is for $32 or processed further for $28 to make the end product refined sugar that is sold for $79.What is the financial advantage (disadvantage) for the company from processing the intermediate product beet juice into refined sugar rather than selling it as is?

• A) $1 per batch
• B) ($17) per batch
• C) $19 per batch
• D) ($52) per batch

---

Definitions:

Process Costing

A costing method used for homogeneous products, allocating costs based on the processes or departments through which the products pass.

Conversion Costs

Costs incurred during the transformation of raw materials into finished goods, including both direct labor costs and manufacturing overhead.

Equivalent Unit

A computation used in process costing that converts partially completed units of production into a number of fully completed units.

Process Costing

A costing method used for homogenous products, which assigns costs to units of product based on the process they go through.