Question

PA Company processes sugar beets that it purchases from farmers. Sugar beets are processed in batches. A batch of sugar beets costs $57 to buy from farmers and $16 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 $23 to make the end product industrial fiber that is sold for $71. The beet juice can be sold as is for $48 or processed further for $27 to make the end product refined sugar that is sold for $71.

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?

a. $(4)

b. $(123)

c. $19

d. $14

Answer 1

Calculation of Net Profit or loss (Amounts in $)

Sale Price of Industrial Fibre	71
Add: Sale Price of Refined Sugar	71
Total Sale Value (A)	142
Cost of Manufacturing:
Cost of buying sugar beets from farmers	57
Cost of Crushing	16
Cost to further process beet fibre	23
Cost to further process beet juice	27
Total Costs (B)	123
Net Profit (A - B)	19

Therefore, the net profit the company can make by processing one batch of sugar beets into the end products industrial fiber and refined sugar is $19. Hence the correct option is c) $19.