Question
Gravel and Sand Corporation has two divisions, Refining and Production. The company's primary product is Quick-dry Cement Mix. Each division's costs are provided below: Production:
Gravel and Sand Corporation has two divisions, Refining and Production. The company's primary product is Quick-dry Cement Mix. Each division's costs are provided below: Production: Variable costs per bag of cement mix $11 Fixed costs per bag of cement mix $7 Refining: Variable costs per bag of cement mix $31 Fixed costs per bag of cement mix $37 The Refining Division has been operating at a capacity of 42,000 bags a day and usually purchases 25,750 from the Production Division and 16,250 bags of cement mix from other suppliers at $62 per bag. Required Based on the provided information, what is the transfer price per bag from the Production Division to the Refining Division, assuming the method used to place a value on each bag of cement mix is 190% of variable costs? Compute the transfer price per bag from the Production Division to the Refining Division, assuming the method used to place a value on each bag of cement mix is 115% of full costs. Assume 230 bags are transformed from the Production Division to the Refining Division for a transfer price of $20 per bag. The Refining Division sells the 230 bags at a price of $105 each to customers. What is the operating income of both divisions together?
$20.90; $20.70; $6,670 | ||
$21.90; $21.70; $6,675 | ||
$21.95; $21.75; $6,670 | ||
$22.05; $21.80; $6,675 |
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