Crooks Corporation Processes Sugar Beets in Batches That It Purchases

question 165

Multiple Choice

Crooks Corporation processes sugar beets in batches that it purchases from farmers for $57 a batch. A batch of sugar beets costs $12 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 $28 or processed further for $17 to make the end product industrial fiber that is sold for $67. The beet juice can be sold as is for $39 or processed further for $24 to make the end product refined sugar that is sold for $54. Which of the intermediate products should be processed further?

• A)beet fiber should be processed into industrial fiber; beet juice should be processed into refined sugar
• B)beet fiber should be processed into industrial fiber; beet juice should NOT be processed into refined sugar
• C)beet fiber should NOT be processed into industrial fiber; beet juice should be processed into refined sugar
• D)beet fiber should NOT be processed into industrial fiber; beet juice should NOT be processed into refined sugar

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Definitions:

Working Capital

The difference between a company's current assets and current liabilities, indicating short-term financial health and operational efficiency.

Balance Sheet

An accounting report detailing a business's assets, debts, and owner's equity on a certain date.

Equity and Debt

The two main types of financing for companies: equity represents ownership (stocks), and debt represents borrowed funds (bonds or loans) that must be repaid.

Tax Deductible

Costs that can be deducted from total income to lower the taxable income amount.