Summer Company Makes Three Types of Products What Is the Operating Profit (Loss)for All Three Products for Types

question 81

Multiple Choice

Summer 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 profit (loss) for all three products for Customer Type 2?

• A) $(700)
• B) $(2,600)
• C) $8,450
• D) $9,600

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Definitions:

Proteins

Large, complex molecules made of amino acids that perform a vast array of functions in living organisms, including structural, enzymatic, and regulatory roles.

Polysaccharide

Polymer made from carbohydrate monomers; the polysaccharides starch and glycogen are polymers of glucose monomers.

Cellulose

A complex carbohydrate or polysaccharide consisting of glucose units, forming the primary structural component of plant cell walls.

Plant Cell Walls

Rigid outer layers surrounding plant cells, made primarily of cellulose, providing structure, support, and protection.