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What is the highest additional amount loco be willing to pay

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Question - 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

What is the highest additional amount Loco would be willing to pay for a cocoa bean?

A. $4.00

B. $6.50

C. $7.00

D. $6.00

E. $7.50

Reference no: EM132100416

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