Drew Cane Products, Incorporated, Processes Sugar Cane in Batches

question 363

Multiple Choice

Drew Cane Products, Incorporated, processes sugar cane in batches. The company buys a batch of sugar cane from farmers for $90 which is then crushed in the company's plant at a cost of $11. 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 $13 to make the end product industrial fiber that is sold for $45. The cane juice can be sold as is for $41 or processed further for $29 to make the end product molasses that is sold for $103. What is the financial advantage (disadvantage) for the company from processing one batch of sugar cane into the end products industrial fiber and molasses rather than not processing that batch at all?

• A) $44
• B) ($143)
• C) ($39)
• D) $5

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Definitions:

PCAOB

The Public Company Accounting Oversight Board, a nonprofit corporation established by Congress to oversee the audits of public companies, ensuring the accuracy and reliability of financial statements.

FASB

The Financial Accounting Standards Board, responsible for establishing accounting and financial reporting standards for companies and nonprofit organizations in the United States.

Annual Report

A comprehensive report detailing a company's activities, financial performance, and operations over the previous financial year.

Interim Financial Statements

Financial reports that are issued for periods of time shorter than the company's full fiscal year, intended to provide an update on the company's financial progress.