Question
Crush Company makes internal transfers at 180% of full cost. The Soda Refining division purchases 30,000 containers of carbonated water per day, on average, from
Crush Company makes internal transfers at 180% of full cost. The Soda Refining division purchases 30,000 containers of carbonated water per day, on average, from a local supplier, who delivers the water for $30 per container via an external shipper. In order to reduce costs the company located an independent producer in Manitoba who is willing to sell 30,000 containers at $20 each, delivered to Crush Company's shipping division in Manitoba. The company's Shipping Division in Manitoba can ship the 30,000 containers at a variable cost of $2.50 per container and a full cost, based on practical capacity, of $4.00 per container. When the company's Manitoba shipping division ships for external customers is charges $6.00 per container. What is the opportunity cost for Crush Company from continuing to purchase the water from the local supplier if the company's Manitoba shipping division has sufficient idle capacity? Question 29 options: $180,000 $600,000 $0 $60,000 $105,000
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