Question
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
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: 600 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 600 ounces of Nitra Cream, assuming it can sell unlimited quantities of all three produces?
Select one:
a. All 600 ounces should be allocated to Chocolate Ice Cream
b. All 600 ounces should be allocated to Strawberry Ice Cream
c. None of the above
d. All 600 ounces should be allocated to Vanilla Ice Cream
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