Mae Refiners, Incorporated, Processes Sugar Cane That It Purchases from Farmers

question 137

Multiple Choice

Mae Refiners, Incorporated, processes sugar cane that it purchases from farmers. Sugar cane is processed in batches. A batch of sugar cane costs $60 to buy from farmers and $13 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 $29 or processed further for $13 to make the end product industrial fiber that is sold for $61. The cane juice can be sold as is for $40 or processed further for $28 to make the end product molasses that is sold for $67.What is the financial advantage (disadvantage) for the company from processing the intermediate product cane juice into molasses rather than selling it as is?

• A) ($74) per batch
• B) ($14) per batch
• C) ($1) per batch
• D) ($38) per batch

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