Answer the following questions using the information below:
Division A sells soybean paste internally to Division B,which in turn,produces soybean burgers that sell for $5 per kilo.Division A incurs costs of $0.75 per kilo while Division B incurs additional costs of $2.50 per kilo.
-Which formula correctly reflects the company's operating profit per kilo?
A)$5.00 - ($1.25 + $2.50)= $1.25
B)$5.00 - ($0.25 + $1.25 + $3.50)= 0
C)$5.00 - ($0.75 + $3.75)= $0.50
D)$5.00 - ($0.75 + $2.50)= $1.75

Question

Quizplus · Accepted Answer

Division B incurs additional costs of $2.50 per kilo on top of the $0.75 per kilo cost incurred by Division A. Therefore, the total cost for each kilo of soybean burger is $0.75 + $2.50 = $3.25. Subtracting this total cost from the selling price of $5.00 per kilo gives an operating profit of $5.00 - $3.25 = $1.75 per kilo. Thus, formula D correctly reflects the company's operating profit per kilo.

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