The milk chocolate division of mmmm foods inc had the, Ask an Expert

Accounting

The Milk Chocolate Division of Mmmm Foods, Inc. had the following operating results last year:

Sales (239,000 pounds of chocolate) $86,040
Variable expenses 52,580
Contribution margin 33,460
Fixed expenses 15,900
Profit $17,560

Milk Chocolate expects identical operating results this year. The Milk Chocolate Division has the ability to produce and sell 280,000 pounds of chocolate annually.

Assume that the Milk Chocolate Division is currently operating at its capacity of 280,000 pounds of chocolate. Also assume again that the Peanut Butter Division wants to purchase an additional 22,400 pounds of chocolate from Milk Chocolate. Under these conditions, what amount per pound of chocolate would Milk Chocolate have to charge Peanut Butter in order to maintain its current profit?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9987486

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