Sheela Dairy Corporation Buys Unprocessed Cows' Milk from Local Farmers

Sheela Dairy Corporation buys unprocessed cows' milk from local farmers. At the dairy, this unprocessed milk is broken down into cream and low-fat milk. The cream can be sold at this point or can be further processed into butter. Which of the following would be relevant in the decision to further process the cream into butter?

A) the amount paid to the farmers to purchase the unprocessed milk.
B) the cost of breaking down the unprocessed milk into cream and low-fat milk.
C) the portion of corporate fixed expenses that are currently being allocated to cream.
D) none of these.

Correct Answer:

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