Assume you are the manager of Tutti Frutti. Would you be in favour of Tutti Frutti supplying the required number of cartons to Jarvis at a unit price of 1.25?

The following data is useful:

Variable costs per unit = 0.90

Contribution of a 0.5-litre carton = 0.60

Contribution of a 10-litre carton = 8.40 = 0.42 per half litre

0.5-litre cartons make up 20% of volume and 10 litre cartons represent 80%.

Weighted contribution per 0.5 litre:

0.6 x 20% + 0.42 x 80% = 0.456

Considering the data above, which of the following is correct?

Group of answer choices

You would not be in favour as the price of 1.25 per unit is less than variable costs and any lost contribution.

You would be in favour as the price of 1.25 per unit is more than variable costs and any lost contribution.

You would be in favour as the price of 1.25 per unit is more than variable costs