Use the Following Information for Questions
the Dairy Division

question 103

Multiple Choice

Use the following information for questions
The Dairy Division of Famous Foods, Inc. produces and sells milk to outside customers. The operation has the capacity to produce 200,000 gallons of milk a year. Last year's operating results were as follows: $$\begin{array} { l r } \text { Sales } ( 160,000 ) \text { gallons } & \$ 500,000 \\\text { Variable costs } & 312,000 \\\text { Contribution margin } & 188,000 \\\text { Fixed costs } & 100,000 \\\text { Net Income } & \$ 88,000\end{array}$$
-Assume the Yogurt Division wants to purchase 30,000 gallons of milk from the Dairy Division. The minimum price that will increase the Dairy Division's profit is

• A) $2.50 per gallon.
• B) $1.18 per gallon.
• C) $1.95 per gallon.
• D) $0.55 per gallon.

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Definitions:

Middle-Class

A social group between the upper and working classes, including professionals, business people, and others with moderate income.

Black Working-Class

The Black working-class refers to members of the Black community engaged in manual or industrial labor, often focusing on economic and social challenges faced by this group.

Poor

Individuals or populations that lack financial resources and essentials for a minimum standard of living.

Poverty Line

The minimum level of income deemed necessary to achieve an adequate standard of living in a given country, used to identify those living in poverty.