Assume a company purchases honeycombs from beekeepers for $2.00 a pound. The honey can be sold in raw form for $3.20 a pound or it can be used to make honey drop candies. Each package of candies contains three-quarters of a pound of honey and can be sold for $4.40. In addition to the cost of the honey, making and selling each container of candies incurs additional variable costs of $1.10 per unit. The monthly fixed costs associated with making the candies include: Master candy-maker’s salary $ 3,550 Depreciation of candy-making equipment 400 Salary of salesperson dedicated to this product 2,000 Total fixed costs $ 5,950 The candy-making equipment does not wear out through use and it has no resale value. Assuming the company makes and sells 8,000 containers of candy, what is the financial advantage (disadvantage) of continuing to process raw honey into candies? Multiple Choice $(5,150) $(4,750) $1,650 $1,250

Assume a company purchases honeycombs from beekeepers for $2.00 a pound. The honey can be sold in raw form for $3.20 a pound or it can be used to make honey drop candies. Each package of candies contains three-quarters of a pound of honey and can be sold for $4.40. In addition to the cost of the honey, making and selling each container of candies incurs additional variable costs of $1.10 per unit. The monthly fixed costs associated with making the candies include: Master candy-maker’s salary $ 3,550 Depreciation of candy-making equipment 400 Salary of salesperson dedicated to this product 2,000 Total fixed costs $ 5,950 The candy-making equipment does not wear out through use and it has no resale value. Assuming the company makes and sells 8,000 containers of candy, what is the financial advantage (disadvantage) of continuing to process raw honey into candies? Multiple Choice $(5,150) $(4,750) $1,650 $1,250

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter10: Short-term Decision Making

Section: Chapter Questions

Problem 6EB: Country Diner currently makes cookies for its boxed lunches. It uses 40,000 cookies annually in the...

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Master candy-maker’s salary	$ 3,550
Depreciation of candy-making equipment	400
Salary of salesperson dedicated to this product	2,000
Total fixed costs	$ 5,950

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