Hrubec Products, Inc., operates a Pulp Division that manufactures wood pulp for use in the production of various paper goods. Revenue and costs associated with a ton of pulp follow: Selling price $20 Expenses: Variable $10 Fixed (based on a capacity of 98,000 tons per year) 6 16 ________________________________________ ________________________________________ 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 33,000 tons of pulp per year from a supplier at a cost of $20 per ton, less a 10% purchase discount. Hrubecs 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 $20 per ton. 1-a. What is the minimum transfer price for Carton Division? What is the maximum transfer price that Pulp Division is ready to pay? (Round your answer If the Pulp Division meets the price that the Carton Division is currently paying to its supplier and sells 33,000 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? How much potential profit will the Pulp Division lose if the $15 price is not met? Refer to (4) above. Assume that due to inflexible management policies, the Carton Division is required to purchase 33,000 tons of pulp each year from the Pulp Division at $20 per ton. What will be the effect on the profits of the company as a whole?