What should the company do


Assume for this question only that the company decided to plant the corn. A local oil refiner has approached the company about converting the crop to grain alcohol (used to make gasohol) rather than selling the grain to the local grain elevator. If Agriproducts converts the grain to alcohol, it will incur additional costs of $0.60 per bushel, and the company will be able to sell the crop to the oil refiner for the equivalent of $2.60 per bushel. Otherwise, the company can sell the corn crop to the local grain elevator for $1.85 per bushel. If Agriproducts elects to sell the grain to the refinery, the company will not incur the variable selling costs. What should the company do ?

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Accounting Basics: What should the company do
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