=+Aluminium is transferred from the Recycling Division to the Fabrication Division at 110% of full cost. The Recycling Division purchases recyclable aluminium for $0.50 per kilogram. The division’s other variable costs equal $2.80 per kilogram, and fixed costs at a monthly production level of 50000 kilograms are $1.50 per kilogram.

During the most recent month, 50000 kilograms of aluminium were transferred between the two divisions. The Recycling Division’s capacity is 70000 kilograms.