Question

The Dark Chocolate Division of Yummy Snacks, Inc. had the following operating results last year: Sales (150,000 pounds of chocolate) $ 60,000 Variable expenses 37,500 Contribution margin 22,500 Fixed expenses 12,000 Profit $ 10,500 Assume that the Dark Chocolate Division is currently operating at its capacity of 150,000 pounds of chocolate. Also assume again that the Peanut Butter Division wants to purchase an additional 20,000 pounds of chocolate from Dark Chocolate. Under these conditions, what amount per pound of chocolate would Dark Chocolate have to charge Peanut Butter in order to maintain its current profit

Answer 1

Answer:

the amount per pound of chocolate that should be charged is $0.40 per pound

Explanation:

The computation of the amount per pound that should be charged is shown below:

= Sales revenue ÷ units

= $60,000 ÷ 150,000 units

= $0.40

Hence, the amount per pound of chocolate that should be charged is $0.40 per pound

We simply applied the above formula so that the correct amount could come by dividing the units from the sales revenue