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Greenwood Paper Company has two divisions. The pulp division prepares the wood for processing. The paper division processes the pulp into paper. During the year,
Greenwood Paper Company has two divisions. The pulp division prepares the wood for processing. The paper division processes the pulp into paper. During the year, the pulp division prepared 40,000 cords of wood at a variable cost of $240,000. All the pulp was transferred to the paper division where additional variable operating costs of $5.00 per cord were incurred. The 400,000 pounds of finished paper were sold for $500,000. Committed fixed costs are not relevant to this transfer. 1. Determine the total contribution margin for each division and for the company as a whole if the transfer price from pulp to paper is, at variable cost, $6.00 per cord. 2. Determine the contribution margin for each division and for the company as a whole of the transfer price from pulp to paper is $9.00 per cord
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