Simon Cereal purchased 100 pounds of cornflakes for $100. Transportation cost to Simon's production facility was $25 for the barrel of cornflakes shipped FOB destination. Simon paid $60 for 100 one-pound biodegradable plastic bags into which the cornflakes were placed. The cost of each one-pound bag of cornflakes is:

Question

Quizplus · Accepted Answer

The total cost of the cornflakes and transportation is $100 + $25 = $125.
Adding the cost of the bags, the total cost of the purchase is $125 + $60 = $185.
Since Simon purchased 100 pounds and placed them in 100 one-pound bags, the cost per one-pound bag is $185/100 = $1.85.
Therefore, the cost of each one-pound bag of cornflakes is $1.85. However, the question is asking for the cost of only the cornflakes in each bag, so we subtract the cost of the bag itself: $1.85 - $0.60 (the cost of the bag per one-pound) = $1.25.
Therefore, the answer is B) $1.25.

Simon Cereal Purchased 100 Pounds of Cornflakes for $100