goods. Revenue and costs associated with a ton of pulp follow: Hrubec Products has just acquired a small company that manufactures paper cartons. Hrubec plans to treat its newly acquired Carton Division as a profit center. The manager of the Carton Division is currently purchasing 6,100 tons of pulp per year from a supplier at a cost of $85 per ton. Hrubec's president is anxious for the Carton Division to begin purchasing its pulp from the Pulp Division if the managers of the two divisions can negotiate an acceptable transfer price. Required: For (1) and (2) below, assume the Pulp Division can sell all of its pulp to outside customers for $92 per ton. 1. What is the Pulp Division's lowest acceptable transfer price? What is the Carton Division's highest acceptable transfer price? What is the range of acceptable transfer prices (if any) between the two divisions? Are the managers of the Carton and Pulp Divisions likely to voluntarily agree to a transfer price for 6,100 tons of pulp next year? 2. If the Pulp Division meets the price that the Carton Division is currently paying to its supplier and selis 6,100 tons of pulp to the Carton Division each year, what will be the effect on the profits of the Pulp Division, the Carton Division, and the company as a whole? For (3)-(6) below, assume that the Pulp Division is currently selling only 30,000 tons of pulp each year to outside customers at the stated $92 price. 3. What is the Pulp Division's lowest acceptable transfer price? What is the Carton Division's highest acceptable transfer price? What is the range of acceptable transfer prices (if any) between the two divisions? Are the managers of the Carton and Pulp Divisions likely to voluntarily agree to a transfor price for 6,100 tons of pulp next year? 4-a. Suppose the Carton Division's outside supplier drops its price to only $81 per ton. Should the Pulp Division meet this price? 4-b. If the Pulp Division does not meet the $81 price, what will be the effect on the profits of the company as a whole? 5. Refer to requirement 4. If the Pulp Dlvision refuses to meet the $81 price, should the Carton Division be required to purchase from the Pulp Division at a higher price for the good of the company as a whole? 6. Refer to requirement 4. Assume that due to inflexible management policies, the Carton Division is required to purchase 6,100 tons of pulp each year from the Pulp Division ot $92 per ton. What will be the effect on the profits of the compony as a whole? What is the Pulp Division's lowest aceeptable transfer price? What is the Carton Division's highest acceptable transfer price? What is the range of acceptable transfer prices (if any) between the two divisions? Are the managars of the Carton and Pulp Divisions likely to voluntarily agree to a transfere price for 6,100 tons of polp next year? If the Pulp Division meets the price that the Carton Division is currantly paying to its supplier and sells 6,100 tons of puip to the Carton Division each year, what will be the effect on the profits of the Pulp Division, the Carton Division, and the company as a whole? (Do not round intermediate calculations.) Complete this question by entering your answers In the tabs below. What is the Pulp Division's lowest acceptable transfer price? What is the Carton Division's highest acceptable transfer price? What is the range of acceptable transfer prices (if any) between the two divisions? Are the managers of the Carton and Pulp Divisions likely to voluntarly agree to a transfer price for 6,100 tons of pulp next year? (Round your answers to nearest whole dollar amount.) If the Pulp Division does not meet the $81 price, what will be the effect on the profits of the company as a whole? Refer to requirement 4. Assume that due to inflexible management policies, the Carton Division is required to purchase 6,100 tons of pulp each year from the Pulp Division at $92 per ton. What will be the effect on the profits of the company as a whole
