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			$	21
Expenses:
Variable	$	11
Fixed (based on a capacity of 96,000 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. 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 :

3. What is the lowest acceptable transfer price from the perspective of the Pulp Division? What is the highest acceptable transfer price from the perspective of the Carton Division? 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 30,000 tons of pulp next year?

6. Refer to (4) above. Assume that due to inflexible management policies, the Carton Division is required to purchase 30,000 tons of pulp each year from the Pulp Division at $21 per ton. What will be the effect on the profits of the company as a whole?

Req 1 Req 2 Req 3 Req 4A Req 5 Req 6 Req 4B What is the lowest acceptable transfer price from the perspective of the Pulp Division? What is the highest acceptable transfer price from the perspective of the Carton Division? 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 30,000 tons of pulp next year? (Round your answers to nearest whole dollar amount.) Show less ldentify the lowest and highest acceptable transfer prices Lowest acceptable transfer price Highest acceptable transfer price 19 $ 21 ldentify the range of acceptable transfer prices (if any): OThere is not a range of acceptable transfer prices There is a range of acceptable transfer prices as shown below Transfer $ 21 nce Are the managers likely to voluntarily agree to a transfer price for 30,000 tons of pulp next ear? 0 Req 6 Req 5 Req 4B Req 4A Req 2 Req 3 Req 1 Refer to (4). Assume that due to inflexible management policies, the Carton Division is required to purchase 30,000 tons of pulp each year from the Pulp Division at $21 per ton. What will be the effect on the profits of the company as a whole? in profit by The company as a whole will have C a(n)