Pillsbury Corporation Makes Two Types of Ice Cream: Chocolate and Peanut

question 35

Multiple Choice

Pillsbury Corporation makes two types of ice cream: Chocolate and Peanut Butter. Operating information from the previous year follows: $\begin{array} { l r r } & \text { Chocolate } & \text { Peanut Butter } \\\text { Units produced and sold } & 6,000 & 5,000 \\\text { Machine hours used } & 6,000 & 2,500 \\\text { Sales price per unit } & \$ 8 & \$ 11 \\\text { Variable cost per unit } & \$ 5 & \$ 9\end{array}$ Fixed costs of $30,000 per year are presently allocated equally between both products. If the product mix were to change, total fixed costs would remain the same. The contribution margin per machine hour for Peanut Butter is:

• A)$0.25.
• B)$2.00.
• C)$4.00.
• D)$5.00.
• E)$20.00.

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Definitions:

Setting A Condition

Establishing a specific requirement or criteria that must be met in a given situation or agreement.

Prospects

Individuals or businesses that are potential customers and have been identified as likely to purchase.

Sales Objection

The prospect’s opposition or resistance to the salesperson’s information or request.

Opposition

Resistance or dissent expressed against an idea, action, or authority.