Use the Following Information for the Next 3 Questions

question 37

Multiple Choice

Use the following information for the next 3 questions.
Division X sells organic high-gluten flour to Division Y. Division X incurs costs of $0.375 per pound of flour. Division Y makes loaves of bread that sell for $2.50 each. Division Y incurs costs of $1.25 per loaf, excluding the cost of the flour. Each loaf of bread uses one-half pound of flour.
-What is the operating income per pound of flour for Division X if the transfer price is set at $0.625/lb?

• A) $0.25
• B) $0.4375
• C) $0.625
• D) $0.8125