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Hrubec Prod various paper goods. Revenue and costs associated with a ton of pulp follow: ucts, Inc., operates a Pulp Division that manufactures wood pulp
Hrubec Prod various paper goods. Revenue and costs associated with a ton of pulp follow: ucts, Inc., operates a Pulp Division that manufactures wood pulp for use in the production of $21 Selling price Expenses Variable Fixed (based on a capacity of $11 102,000 tons per year) 6 17 Net operating income $4 Hrubec Products has just acquired a small company that manufactures paper cartons. This company will be treated as a division of Hrubec with full profit responsibility. The newly formed Carton Division is currently purchasing 30,000 tons of pulp per year from a supplier at a cost of $21 per ton, less a 10% purchase discount. Hrubec's president is anxious for the Carton Division to begin purchasing its pulp from the Pulp Division if an acceptable transfer price can be worked out. Required For (1) and (2) below, assume that the Pulp Division can sell all of its pulp to outside customers for $21 per ton 1-a. What is the minimum Transfer Price at which Pulp is willing to sell within the firm? ariable cost per unit otal contribution margin on lost sales of units transferred 30,000 Transfer price 2 1-b. What is the maximum Transfer Price at which Carton is willing to buy within the firm? (Round your an swer to 2 decimal places.) Maximum transfer price
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