Exhibit 22-5 Imperial Company Manufactures Two Types of Fruit Drinks

question 35

Multiple Choice

Exhibit 22-5 Imperial Company manufactures two types of fruit drinks, Tropical and Hawaiian. The company can sell as many bottles of each product as it can produce, but production is limited by the availability of direct labor hours. The revenues, costs, and labor hours for the two products are as follows:
Refer to Exhibit 22-5. With 1,000 direct labor hours available for production, if Imperial Company uses the entire amount to produce Tropical, the contribution margin in total dollars would be:

• A) $24,000
• B) $30,000
• C) $48,000
• D) $60,000

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Definitions:

Technical Sophistication

Technical sophistication refers to the level of advanced technological features and capabilities present in a product or system.

Complexity

The state or quality of being intricate or complicated, often referring to systems, processes, or structures with multiple interacting components.

Risk

The potential for loss or an unfavorable outcome associated with an action or decision.

Financial

Related to finances or financial systems, involving money management, investment, and economic activities.