Use the Information Below to Answer the Following Question(s)

question 108

Multiple Choice

Use the information below to answer the following question(s) .Bon Accord uses two divisions in the production of soybean burgers.Division A sells soybean paste internally to Division B, which, in turn, produces soybean burgers that sell for $5 per kilogram.Division A incurs costs of $0.75 per kilogram, while Division B incurs additional costs of $2.50 per kilogram.
-What is Bon Accord's operating income per kilogram?

• A)$1.75
• B)$1.25
• C)$0.50
• D)$0
• E)$2.00

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Definitions:

Marginal Costs

The cost added by producing one additional unit of a product or service.

Disposable Income

The amount of money individuals or households have to spend or save after taxes have been deducted.

Carrying Costs

Expenses associated with holding inventory, including storage, handling, insurance, and spoilage costs.

Variable Cost

Costs that change in proportion to the activity of a business such as production volume or sales.