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:

Action Identification Theory

A theory suggesting that the level at which an individual identifies an action influences how they perform and perceive the action.

Concrete

A building material made from a mixture of broken stone or gravel, sand, cement, and water, which can be spread or poured into molds and forms a stone-like mass on hardening.

Abstract

Referring to concepts or ideas that are not concrete or tangible, but are instead thought of in a theoretical or conceptual way.

Chopsticks

Eating utensils consisting of a pair of long, thin pieces of wood or other material, commonly used in many East Asian countries.