Use the Information for the Question(s)below

question 35

Multiple Choice

Use the information for the question(s) below. As an oil refiner, you are able to produce $77 worth of unleaded gasoline from one barrel of Alaska North Slope (ANS) crude oil. Because of its lower sulfur content, you can produce $78 worth of unleaded gasoline from one barrel of West Texas Intermediate (WTI) crude. Assuming you currently have 10,000 bbl of WTI crude, the total benefits to you if you were to sell the 10,000 bbl of WTI crude and use the proceeds to purchase and refine ANS crude is closest to ________.

• A)$794,274
• B)$780,000
• C)$781,550
• D)$784,091

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Definitions:

Conversion Costs

The sum of direct labor and manufacturing overhead costs, representing the total expenses necessary to transform raw materials into finished goods.

Materials Purchased

This refers to the raw materials bought by a company for the production of goods.

Materials Requisitioned

The process of formally requesting materials or supplies, usually from a company's inventory, for production or other uses within the organization.

Production Department

A segment within a company responsible for the production of goods or services.