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Flounder Consolidated has several divisions, two of which transfer their products to other divisions. The Mining division refines toldine, which it then transfers to the

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Flounder Consolidated has several divisions, two of which transfer their products to other divisions. The Mining division refines toldine, which it then transfers to the Metals division. The Metals division processes the toldine into an alloy and sells it to customers at a price of $151 per barrel. Flounder currently requires the Mining division to transfer its total annual output of 415.700 barrels of toldine to the Metals division at total manufacturing cost plus 10%. Unlimited quantities of toldine can be purchased and sold on the open market at $91 per barrel. While the Mining division could sell all the toldine it produces on the open market at $91 per barrel, it would incur a variable selling cost of $5 per unit to do so. Barker Jonas manager of the Mining division, is unhappy with having to transfer the division's entire output of toldine to the Metals division at 110% of cast. In a meeting with the management of Flounder, he protested, "Why should my division be required to sell toldine to the Metals Division at less than market price for the year just ended in May, Metals contribution margin was over $19 million on sales of 415,700 barrels, while Mining's contribution on the transfer of the same number of units was just over $5 million My division is subsidizing the prontability of the Metals division. We should be allowed to change market price for toldine when we transfer it to the Metals division Detailed unit costs for both the Mining and Metals divisions follow. Mining Division Metal Division saa $12 Transfer price from Mining division Direct material Direct labor Manufacturing overhead Total cost per bare 20 16 32 24 $60 5118 Manufacturing overhead cost in the Mining division is 25% fixed and 75% variable. In the Metals division, it is 80% wed and 4034 variable (b} Using the market price as the transfer price, determine the contribution margins for both divisions for the last fiscal year (Round intermediate calculation to 2 decimal places tg 12.25 and finalauswers to decimo les es 125. Mining Metals $ $ Total contribution margin (c) Flounder Consolidated were to institute negotiated transfer prices and allow divisions to buy and sell on the open market, what price range for toldne would be acceptable to both divisions S Minimum transfer price that mining will accept S Maximum price that metals will pay

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