Question

Kosakowski Corporation processes sugar beets in batches. A batch of sugar beets costs $69 to buy from farmers and $17 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 $26 or processed further for $16 to make the end product, industrial fiber that is sold for $42. The beet juice can be sold as is for $45 or processed further for $23 to make the end product, refined sugar that is sold for $90. How much more profit (loss) does the company make by processing one batch of sugar beets into the end products industrial fiber and refined sugar?

Answer 1

	Sugar Beet Cost	69.00
	Crushing Cost	17.00
	Joint Cost	86.00
	Outputs:	Sell Price At Spilt Off	Further Processing Cost	Sell Price After Processing	End Product
	Beet Fiber	26.00	16.00	42.00	Industrial Fibre
	Beet Juices	45.00	23.00	90.00	Refined Sugar
		71.00
	Allocation of Joint Costs based on Sale Value Method:
	Outputs:	Allocation Costs
	Beet Fiber	31.49	(86/71*26)
	Beet Juices	54.51	(86/71*45)
	Profit (Loss):	A	B	C	A-(B+C)
	End Product	Sell Price After Processing	Allocation Costs	Further Processing Cost	Profit (Loss)
	Industrial Fibre	42.00	31.49	16.00	-5.49
	Refined Sugar	90.00	54.51	23.00	12.49