Blackoil Corp. has two divisions, Refining and Production. The company's primary product is Clean Oil. Each division's costs are provided below: Refining Variable costs per litre of oil Fixed costs per litre of oil $30 $24 Production: Variable costs per litre of oil $6 Fixed costs per litre of oil 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 litres a day, using oil from the Production Division and oil purchased from other suppliers. The Refining Division usually purchases 50,000 litres of oil, on average, from the Production Division and 30,000 litres, on average, from other suppliers at $40/litre. What is the transfer price per litre from production to refining if the market price method of pricing is used? $24 $36 $38 $32 $40 Easy Fit Ltd. manufactures heating, ventilation, and air conditioning (HVAC) equipment. The Manufacturing Division creates parts; and, the Assembly Division builds and sells the equipment. The Manufacturing Division "sells" furnace parts packages to the Assembly Division. The market price for the Assembly Division to purchase a mini furnace is $3,500. The fixed costs for the Manufacturing Division are assumed to be the same over the range of 2,000-5,000 units. The fixed costs for the Assembly Division are assumed to be $40.00 per unit at 5,000 units. Manufacturing costs per furnace are: Direct materials Direct labour $1,300.00 $350.00 Variable overhead $100.00 Division fixed costs $90.00 Assembly's costs per completed furnace are: Direct materials Direct labour $25.00 $150.00 Variable overhead Division fixed costs $50.00 $40.00 If the Assembly Division sells 1,000 furnaces at a price of $3,500 per unit to customers, what is the company's operating income? $1,660,000 $3,250,000 $175,000 $3,235,000 $1,395,000 Soft Cushion Company is highly decentralized. Each division is empowered to make its own sales decisions. The Assembly Division can purchase cushion stuffing from the Production Division or from external suppliers. The Production Division has been the major supplier of stuffing in recent years. The Assembly Division has announced that two external suppliers will be used to purchase the stuffing at $20 per kilogram for the next year. The Production Division recently increased its unit price to $40. The manager of the Production Division presented the following information; variable cost $32, fixed cost $8, to top management in order to attempt to force the Assembly Division to purchase the stuffing internally. The Assembly Division purchases 20,000 kg per month. What is the monthly operating advantage (disadvantage) of purchasing the goods internally assuming the Production Division is able to utilize the facilities for other operations resulting in monthly cash-operating savings of $40,000? $280,000 $(360,000) $440,000 $40,000 $(280,000)