Axelia Corporation has two divisions, Refining and Extraction. The company's primary product is Luboil Oil. Each division's costs are provided below:

Extraction:	Variable costs per barrel of oil $16
	Fixed costs per barrel of oil $12
Refining:	Variable costs per barrel of oil $26
	Fixed costs per barrel of oil $36

The Refining Division has been operating at a capacity of

40,500

barrels a day and usually purchases

25,000

barrels of oil from the Extraction Division and

16,000

barrels from other suppliers at

$62

per barrel.Assume

240

barrels are transferred from the Extraction Division to the Refining Division for a transfer price of

$20

per barrel. The Refining Division sells the

240

barrels at a price of

$190

each to customers. What is the operating income of both divisions together?

Question content area bottom

Part 1

A.

$15,360

Your answer is not correct.

B.

$9,600

C.

$40,800

D.

$24,000

This is the correct answer.

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