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Cullumber Industries is a decentralized company with two divisions: mining and processing. They are both evaluated as profit centres. The mining division transfers raw diamonds
Cullumber Industries is a decentralized company with two divisions: mining and processing. They are both evaluated as profit centres. The mining division transfers raw diamonds to the processing division. The processing division is currently operating at 1 million kg below its capacity, while the mining division is operating at full capacity. The mining division can sell raw diamonds externally at $80 per kilogram. The unit cost of 1 kg of polished diamonds produced by the processing division is as follows: Raw diamonds $80 11 31 Direct materials Direct labour ($20/hour) Variable manufacturing overhead Fixed manufacturing overhead 21 55 Total unit cost $198 Based on a capacity of 5.50 million kg per year. The processing division has just received an order from International Diamonds Co. for 350,000 kg of polished diamonds at a price of $180 per kilogram. Cullumber has a policy that prohibits selling any product below total cost. The total cost of a kilogram of raw diamonds in the mining division is $65, of which 25% is company fixed costs. Calculate the following for Cullumber. (Round "Variable cost of row diamonds" answer to 2 decimal places, eg, 25.35) Variable cost of raw diamonds $ Contribution margin from selling 350,000 kilograms of raw diamonds Contribution margin from selling 350,000 kilograms of polished diamonds Would Cullumber as a whole benefit if the raw diamonds were transferred to the processing division at 565 per kilogram to fill the order from international Diamonds? Calculate the minimum and maximum transfer prices that could be used. (Round answers to 2 decimal places, es. 25.35.) Minimum transfer price $ Maximum transfer price $ Recommend an appropriate transfer price for raw diamonds sold by the mining division to the processing division (Round answers to 2 decimal places, es. 25.35) A Appropriate transfer price $ the mining division was not operating at full capacity calculate the appropriate transfer price. Round answers to decimal posts 2535) propriate traer price would be between 5 sed Would you interest
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