Use the Following Information for the Next 3 Questions

question 13

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 for the entire organization if 100,000 loaves of bread are sold?

• A) $93,750
• B) $125,000
• C) $106,250
• D) $87,500

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Definitions:

IFRS 8

A segment of International Financial Reporting Standards related to Operating Segments, requiring certain entities to disclose information about their operating segments, products and services, geographical areas, and major customers.

Impairment Loss

A reduction in the recoverable amount of a fixed asset or goodwill below its carrying amount, recognized in the financial statements.

Net Realizable Value

The estimated selling price of goods, minus estimated costs of completion and any costs necessary to make the sale.

Volume Rebates

Discounts or refunds provided to buyers based on the volume of goods or services purchased over a specified period.