Loco for Cocoa, LLC processes cocoa beans into two products: chocolate powder and chocolate syrup. Demand for chocolate powder is 15,000 units; demand for chocolate syrup is 20,000 units. Loco only has 100,003 beans on hand and will not be able to obtain any more for several weeks. Each bean costs $0.50 from the supplier. Fixed costs are $20,000 per period. The following information is available for each unit of product:

	Powder	Syrup
Sales Price	$47.00	$65.00
Direct Material (consists only of cocoa beans)	2.50	4.00
Direct Labor	8.00	9.00
Other Variable Costs	1.50	4.00

1) What is the highest amount Loco would be willing to pay per additional cocoabean? (Read carefully what this is asking.)

A.

$6.00

B.

$7.50

C.

$6.50

D.

$7.00

E.

$4.00

2) How many additional beans would Loco be willing to purchase at the above price?

A.

160,000

B.

100,003

C.

100,000

D.

135,000

E.

134,997