Question
A Company has two divisions, A Division and C Division. C Division would like to buy 15,000 tons of pulp from A Division. Currently, A
A Company has two divisions, A Division and C Division. C Division would like to buy 15,000 tons of pulp from A Division. Currently, A Division is operating at full capacity and is making 50,000 tons of pulp per month. Costs of pulp are as follows:
Variable costs | $56 per ton |
Fixed costs | $20 per ton |
The company uses a cost-based transfer pricing and its policy is to set a transfer price of pulp at a 14% markup to the pulp's full costs.
(Q) Based on the company's policy, what is the price per ton that the A Division should charge the C Division?
(Do not round intermediate calculations. Round the final numbers to two decimal places.)
(A) $ per ton
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