Multiple Choice
Division A sells soybean paste internally to Division B, which in turn, produces soybean burgers that sell for $5 per pound. Division A incurs costs of $0.75 per pound while Division B incurs additional costs of $2.50 per pound.
Which of the following formulas correctly reflects the company's operating income?
a. $5.00 - ($0.75 + $2.50) = $1.75
b. $5.00 - ($1.25 + $2.50) = $1.25
c. $5.00 - ($0.75 + $3.75) = $0.50
d. $5.00 - ($0.25 + $1.25 + $3.50) = 0
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