Atwood Dairy Bar Sells Its Famous Soft-Serve Ice Cream Cones

question 44

Multiple Choice

Atwood Dairy Bar sells its famous soft-serve ice cream cones near a marina and resort area. The owner, Theresa, wants to determine the cost behaviour patterns to help planning for the next summer season. She has the following information available about the operating costs and the number of soft-serve cones served.

Theresa uses the high-low method to determine the operating cost equation and sells 8,000 cones in a month for $2.00 each.
-What would the operating income be at Atwood Dairy Bar if the owner prepared a contribution margin income statement for that month?

• A) $14,000
• B) $2,000
• C) $16,000
• D) $10,425

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Definitions:

Future Improvements

Enhancements or upgrades anticipated or planned for the future to increase efficiency, performance, or satisfaction.

Higher Future Prices

The anticipation or expectation that the prices of goods and services will rise in the future.

Proved Reserves

Quantities of natural resources like oil or gas that geological and engineering information indicates with reasonable certainty to be recoverable under existing economic and operational conditions.

Current Prices

Prices of goods and services measured during the current year or period, not adjusted for inflation.