Because the appearance of the bottle heavily influences sales volume, Mack's developed a unique bottle productlon process at the

company's container plant, which is a part of Packaging Division. Blending Division uses all of the container plant's production. Each

dlvision $($Blending and Packaging$)$ Is considered a separate profit center and evaluated as such. As the new corporate controller, you

are responsible for determining the proper transfer price to use for the bottles produced for Blending Division.

At your request, Packaging Division's general manager asked other bottle manufacturers to quote a price for the number and slzes

demanded by Blending Division. These competitlve prices follow:

${?}^a$ An equlvalent case represents $24$ bottles.

Packaging Division's cost analysis indicates that it can produce bottles at these costs.

These costs include fixed costs of $$670,000$ and varlable costs of $$16\mathrm{.}20$ per equlvalent case. These data have caused considerable

corporate discussion as to the proper price to use in the transfer of bottles from Packaging Division to Blending Division. This interest

is heightened because a signlficant portion of a division manager's Income is an incentive bonus based on profit center results.

Blending Division has the following costs in addition to the bottle costs:

The corporate marketing group has furnished the following price$-$demand relationship for the finished product:

Required:

a$.$ Mack's Juices has used market price$-$based transfer prices in the past. Using the current market prices and costs and assuming a

volume of $300,000$ cases, calculate operating profits for the Packaging Division, Blending Division, and Mack's Julces.

b$-1.$ Calculate operating profits for Packaging. Blending, and Mack's Julces for volumes of $100,000,200,000$ and $300,000$ cases.

b$-2.$ Which volume of production is the most profitable for Packaging. Blending, and Mack's Julces?

Complete this question by entering your answers in the tabs below.

Mack's Juices has used market price$-$based transfer prices in the past. Using the current market prices and costs and

assuming a volume of $300,000$ cases, calculate operating profits for the Packaging Division, Blending Division, and Mack's

Juices.

Note: Enter your answers in thousands of dollars.

Profits for Packaging Division

Profits for Blending Division

Profits for Mack's Juices