Use the Information for the Question(s) Below

question 21

Multiple Choice

Use the information for the question(s) below.
As an oil refiner, you are able to produce $76 worth of unleaded gasoline from one barrel of Alaska North Slope (ANS) crude oil. Because of its lower sulfur content, you can produce $77 worth of unleaded gasoline from one barrel of West Texas Intermediate (WTI) crude.
-Another oil refiner is offering to trade you 10,150 Bbls of Alaska North Slope (ANS) crude oil for 10,000 Bbls of West Texas Intermediate (WTI) crude oil.Assuming you just purchased 10,000 Bbls of WTI crude at the current market price,the total benefit (cost) to you if you take the trade is closest to:

• A) $730,600
• B) $770,000
• C) $771,400
• D) $773,908

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Definitions:

Sales Price Reduction

A decrease in the listed selling price of goods or services, often to stimulate demand or respond to market conditions.

Contribution Margin Ratio

A financial indicator that measures how a product's selling price exceeds its variable costs, expressed as a percentage.

Revenue Remaining

The amount of income that remains after subtracting costs and expenses from the total revenue.

Relevant Range

The span within which the assumptions about fixed and variable cost behaviors are valid.