Question

Real High Corporation processes hemp that it purchases from farmers. Hemp is processed in batches. A batch of hemp costs $63 to buy from farmers and $22 to crush in the company's plant. Two intermediate products, hemp fiber and hemp juice, emerge from the crushing process. The hemp fiber can be sold as is for $33 or processed further for $35 to make the end product industrial fiber that is sold for $83. The hemp juice can be sold as is for $54 or processed further for $39 to make the end product refined hemp juice that is sold for $83.

What is the financial advantage (disadvantage) for the company from processing one batch of hemp into the end products industrial fiber and refined hemp rather than not processing that batch at all?

Answer 1

The answer has been presented in the supporting sheet. For detailed answer refer to the supporting sheet.