Use the Information for the Question(s)below

question 10

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.
-Assuming you currently have 10,000 Bbls of WTI crude,the added benefit (cost) to you if you were to sell the 10,000 Bbls of WTI crude and use the proceeds to purchase and refine ANS crude is closest to:

• A)($1400).
• B)$1400.
• C)($3908).
• D)$3908.

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Definitions:

Contribution Format

An income statement variant that divides expenses into variable and fixed groups, emphasizing the contribution margin.

Break-even Point

The point at which total costs and total revenue are equal, leading to neither profit nor loss.

Fixed Expenses

Costs that remain constant regardless of the level of goods or services produced, such as salaries and rent.

Contribution Margin

The difference between sales revenue and variable costs, indicating how much revenue contributes towards covering fixed costs and generating profit.