Question
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
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 or processed further to make industrial fiber. The beet juice can be sold as is or processed further to make refined sugar. Sales prices and costs of further processing are presented below.
Intermediate Products | Sales Price Sold As Is | Cost of Furthering Processing | Sales of end product |
Beet Fiber | $28 | $17 | $67 |
Beet Juice | $39 | $24 | $54 |
What is the increase or decrease to net operating income per unit if each of the intermediate products are processed after the split-off point?
a.) $39 and $15 for Beet Fiber and Beet Juice respectively.
b.) $39 and ($15) for Beet Fiber and Beet Juice respectively.
c.) $22 and ($9) for Beet Fiber and Beet Juice respectively.
d.) $38 and $18 for Beet Fiber and Beet Juice respectively.
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