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Hayase Corporation Processes Sugar Beets That It Purchases from Farmers

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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?

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Definitions:

Direct Labor Hours

The total time workers spend producing a product or service, directly associated with its manufacture.

Plantwide Overhead Rate

A single overhead absorption rate used throughout a manufacturing plant for allocating overhead costs to products.

Machine Hours

A measure of the amount of time a machine is operated in the production of goods.

Allocation Base

A criterion or standard used to distribute overhead costs among various products, services, or departments within a business.

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