Choice Coffee Has Computed Their Fixed Costs to Be

question 100

Multiple Choice

Choice Coffee has computed their fixed costs to be $.20 for every cup of coffee they sell given an average daily sales level of 600 cups. They charge $1.65 per cup of coffee. The variable cost per cup is $.45. What is the contribution margin per cup of coffee sold?

• A) $.65
• B) $.90
• C) $1.00
• D) $1.20
• E) $1.65

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Definitions:

Financial Information System

A computerized system that collects, processes, stores, and reports financial data to assist in decision-making and control.

Dollars and Cents

The basic units of currency in many countries, including the United States, representing the monetary value of goods, services, or financial transactions.

Accounting Information

Data related to the financial transactions and status of an organization that is used for analysis, planning, and decision-making.

External Users

Individuals or entities outside of a company who use its financial statements for decision-making, such as investors, creditors, and regulatory agencies.