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 24

Expenses:

Variable $14

Fixed based on a capacity

of 101,00 tons per year $6 $20

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 $24 per ton, less a 10% purchase discount. Hrubec