Question
Farmers Corporation processes sugar beets that it purchases from farmers. Sugar beets are processed in batches. A batch of sugar beets costs $106 to buy
Farmers Corporation processes sugar beets that it purchases from farmers. Sugar beets are processed in batches. A batch of sugar beets costs $106 to buy from farmers and $36 to crush in the company's plant. Two products, beet fiber and beet juice, emerge from the crushing process. The beet fiber can be sold as is for $50 or processed further for $32 to make the product industrial fiber that is sold for $78. The beet juice can be sold as is for $64 or processed further for $28 to make the product refined sugar that is sold for $158.
Assume Farmers Co. has NO fixed costs. How much is the financial advantage or disadvantage of processing beet fiber into industrial fiber?
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