Amazon Beverages produces and bottles a line of soft drinks using exotk frults from Latin America and Asla. The manufacturing process entails mixing and adding Jutces and coloring ingredtents at the bottling plant, which is a part of Mixing Division. The finlshed product is packaged in a company-produced glass bottle and packed in cases of 24 bottles each. Because the appearance of the bottle heaviy Influences sales volume, Amazon developed a unque bottle production process at the company's contalner plant, which is a part of Container Dtvision. Moxing DMision uses all of the contalner plant's production. Each diviston (Moxing and Containen) is constdered a separate proff center and evaluated as such. As the new corporate contioller, you are responsible for determining the proper transfer price to use for the bottles produced for Mixing Divsion. At your request, Container Divlsion's general manager asked other bottle manufactureis to quote a price for the number and sizes demanded by Moing Diviston. These competitive prices folow. An equivalent case represents 24 bottes. Container Division's cost analysis indicates that it can produce botties at these costs. These costs include foxed costs of $880,000 and vartable costs of $4.80 per equivalent case. These data have caused considerable corporate discussion as to the proper price to use in the transfer of botties from Container Division to Mbing Division. This interest is helghtened because a significant portion of a division manager's income is an incentive bonus based on proft center results. Mixing DNision has the following costs in addiuon to the botte costs. Mixing DMision has the following costs in addition to the botue costs. The corporate marketing group has tumished the following price-demand relationship for the finished product: Required: a. Amazon Beverages has used market price-based transter prices in the past. Using the current market prices and costs and assuming a volume of 1.44 mililon cases. Calculate operating profits for Container Division. Mixing DMsion, Amazon Beverages. b-1. Cakulate operating proftis tor Container, Mixing and Amazon Beverages for volumes or 480,000,960,000 and 1,440,000 cases. b.2. Which volume of produxtion is the most proftable for Container. Moxing and Amazon Beverages? Complete this question by entering your answers in the tabs below. Amazon Beverages has used market price-based transfer prices in the past. Using the current market prices and costs and assuming a volume of 1.44 million cases. Calculate operating profits for Container Dlvision, Mixing Division, Amazon Beverages. (Enter your answers in thousands of dollars.) Complete this question by entering your answers in the tabs below. Calculate operating profits for Container, Mixing and Amazon Beverages for volumes of 480,000,960,000 and 1,440,000 cases. (Enter your answers in thousands of dollars.) Which volume of production is the most profitable for Container, Mixing and Amazon Beverages
