Transfer pricing methods, goal-congruence. BlackoilCorp. has two divisions, Refining and Production. The company's primary product is Clean Oil. Each division's costs are provided below:

The Production Division is able to sell the oil to other areas for $24 per litre. The Refining Division has been operating at a capacity of 80,000 barrels a day, purchasing 50,000 barrels of oil, on average, from the Production Division and 30,000 barrels, on average, from other suppliers at $40 per barrel.
REQUIRED 1. What is the transfer price per litre assuming the method used to place a value on each barrel of oil is 175% of variable costs?
2. What is the transfer price per litre from the Production Division to the Refining Division assuming the method used to place a value on each barrel of oil is 120% of full costs?
3. What is the transfer price that makes the production division indifferent to sell internally or to outside customers?LO1

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Refining: Production: Variable costs per litre of oil Fixed costs per litre of oil Variable costs per litre of oil Fixed costs per litre of oil $30 $24 $ 6 $ 4