Donna Company Makes Three Types of Products What Is the Operating Income for All Three Products for Types

question 8

Multiple Choice

Donna Company makes three types of products.The company has two types of customers.The cost to serve all customers is $12,000 and is allocated to customer types based on the number of manager visits to customer locations.The following data are available:
$\begin{array}{llll}&\text { Product } 1&\text { Product } 2&\text { Product } 3\\\text { Sales } & \$ 5,000 & \$ 6,000 & \$ 30,000 \\\text { Cost of goods sold } & \underline{4,000} & \underline{4,800} & \underline{15,000} \\\text { Gross margin }&\$1,000&\$1,200&\$15,000\end{array}$
$\begin{array}{lll}&\text { Customer type }1&\text { Customer type }2\\\text { Product 1 Sales } & \$ 500 & \$ 4,500 \\\text { Product 2 Sales } & \$ 1,000 & \$ 5,000 \\\text { Product 3 Sales } & \$ 16,000 & \$ 14,000 \\\text { Manager visits } & 4 & 16\end{array}$
What is the operating income for all three products for Customer Type 1?

• A) $2,400
• B) $5,850
• C) $5,900
• D) $9,600

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Definitions:

Normative Social Influence

It is the influence of other people that leads us to conform in order to be liked and accepted by them.

Compliance

The act of conforming, submitting, or adapting one's actions to another's wishes, rules, or regulations.

Referent Group

A group to which an individual or another group is compared, often for the purpose of evaluating and understanding one's own attitudes, values, and behaviors.

In-Group

A group in society with which an individual psychologically feels a sense of belonging.