Answered: 3. Ice Cream Company makes three…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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3. Ice Cream Company makes three products (Chocolate Ice Cream, Vanilla Ice Cream, and Strawberry Ice cream), all of which use a very rare ingredient called Nitra Cream. Ice Cream Company can purchase only 500 ounces of Nitra Cream per month from a South American source. Below are data for the three products: Chocolate Vanilla Strawberry Unit selling price $40 $32 $50 Unit variable cost 10 20 30 Unit contribution margin $30 $12 $20 Nitra Cream (ounces per unit) 10 15 20 How should Ice Cream Company allocate the 500 ounces of Nitra Cream, assuming it can sell unlimited quantities of all three produces? PLEASE EXPLAIN WITH STEPS Select one: A. All 500 ounces should be allocated to Chocolate Ice Cream. B. All 500 ounces should be allocated to Vanilla Ice Cream. C. All 500 ounces should be allocated to Strawberry Ice Cream. D. None of the above

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