The Dark Chocolate Division of Yummy Snacks,Inc

question 58

Multiple Choice

The Dark Chocolate Division of Yummy Snacks,Inc.had the following operating results last year: Dark Chocolate expects identical operating results this year.The Dark Chocolate Division has the ability to produce and sell 200,000 pounds of chocolate annually.Assume that the Peanut Butter Division of Yummy Snacks wants to purchase an additional 20,000 pounds of chocolate from the Dark Chocolate Division.Assume that the Dark Chocolate Division is currently operating at its capacity of 200,000 pounds of chocolate.Also assume again that the Peanut Butter Division wants to purchase an additional 20,000 pounds of chocolate from Dark Chocolate.Under these conditions,what amount per pound of chocolate would Dark Chocolate have to charge Peanut Butter in order to maintain its current profit?

• A)$0.40 per pound
• B)$0.08 per pound
• C)$0.15 per pound
• D)$0.25 per pound
• E)$0.30 per pound

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Definitions:

Balance Sheet Accounts

Accounts that report the financial position of a company, including assets, liabilities, and shareholders' equity, at a specific point in time.

Closing Process

The transfer process of converting temporary account balances to zero by transferring the revenue and expense account balances to the owner’s capital account, and transferring the owner’s drawing account balance to the owner’s capital account.

Drawing Account

An account used to track withdrawals made by the owner of a sole proprietorship from the business for personal use.

Temporary Account

An account in financial accounting that is used to collect revenues, expenses, and withdrawal information which is transferred to permanent accounts at the end of an accounting period.