Hrubec Products, Incorporated, operates a Pulp Division that manufactures wood pulp for use in the production of various paper goods. Revenue and costs assoclated with a ton of pulp follow: Hrubec Products has just acquired a small company that manufoctures paper cartons. Hrubec plans to treat its newy acquired Carton Division as a profit center. The manager of the Carton Division is currently purchasing 6700 tons of pulp per year from a supplier at a cost of $97 per ton. Hrubec's president is anxious for the Carton Division to begin purehasing its puip from the Pulp Division if the managers of theltwo divitions can negotiate an acceptable transfer price. Required: For (1) and (2) below, astume the Pulp Division can sell all of its pulp to outside customers for 5104 per ton. 1. What is the Puip Division's lowest acceptable transfer price? What is the Carton Divion's highest accegtable transfer price? What is the range of acceptable transfer prices (f any between the two divisions? Are the managers of the Carton and Pulp Divisions likely to voluntarity agree to a transfer pice for 6.700 tons of pulp next year? 2. If the Pulp Division meets the price that the Carton Divion is currenty paying to its supptier and selis 6.700 tons of pulp to the Carton Divtsion each year, what wil be the effect on the profits of the Pulp Divilion, the Carton Division, and the company as a whole? For (3)-16) below, Bssume that the Pulp oivision is currenty seling only 30.000 tons of pulp each year to outside customers at the stated 5104 price 3. What is the Pulp Divisions lowest occeptable transfer price? What is the Carton Divilons highest acceptable transfer price? What is the range of acceptable transter prices of any) between the two divisions? Are the mansgers of the Carton and Pulp Divisions likely to voliantarlly agree to a transfor price for 6,700 tons of pulp next year? 4a. Suppose the Carton Division's outside supplen droos its pice to only $93 per ton. Should the Pulp Division maet this price? 3. What is the Pulp Division's lowest acceptable transfer price? What is the Carton Division's highest acceptable transfer price? 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 6,700 tons of pulp next year? 4-a. Suppose the Carton Division's outside supplier drops its price to only $93 per ton. Should the Pulp Division meet this price? 4-b. If the Pulp Division does not meet the $93 price, what will be the effect on the profits of the company as a whole? 5. Refer to requirement 4. If the Pulp Division refuses to meet the $93 price, should the Carton Division be required to purchase from the Pulp Division ot a higher price for the good of the company as a whole? 6. Rofec to requirement 4. Assume that due to inflexible management policies, the Carton Division is required to purchase 6,700 tons of pulp each year from the Pulp Division at $104 per ton. What will be the effect on the profits of the company as a whole? Complete this question by entering your answers in the tabs below. Refer to requirement 4. It the Pulp Division refuses to meet the 593 price, should the Carton Division be required to purchase from the Pulp Division at a higher price for the good of the compsny as a whole? Shosid the Carton DNision be recuired to purchase from the Pup OMsion Complete this question by entering your answers in the tabs below. Refer to requirement 4. Assume that due to infiexible management policles, the Carton Olvision is required to purehase 6,700 tons of pu'p eoch year from the pulp Division at $104 per ton. What wiil be the effect on the profits of the company as a whole? Hrubec Products, Incorporated, operates a Pulp Division that manufactures wood pulp for use in the production of various paper goods. Revenue and costs assoclated with a ton of pulp follow: Hrubec Products has just acquired a small company that manufoctures paper cartons. Hrubec plans to treat its newy acquired Carton Division as a profit center. The manager of the Carton Division is currently purchasing 6700 tons of pulp per year from a supplier at a cost of $97 per ton. Hrubec's president is anxious for the Carton Division to begin purehasing its puip from the Pulp Division if the managers of theltwo divitions can negotiate an acceptable transfer price. Required: For (1) and (2) below, astume the Pulp Division can sell all of its pulp to outside customers for 5104 per ton. 1. What is the Puip Division's lowest acceptable transfer price? What is the Carton Divion's highest accegtable transfer price? What is the range of acceptable transfer prices (f any between the two divisions? Are the managers of the Carton and Pulp Divisions likely to voluntarity agree to a transfer pice for 6.700 tons of pulp next year? 2. If the Pulp Division meets the price that the Carton Divion is currenty paying to its supptier and selis 6.700 tons of pulp to the Carton Divtsion each year, what wil be the effect on the profits of the Pulp Divilion, the Carton Division, and the company as a whole? For (3)-16) below, Bssume that the Pulp oivision is currenty seling only 30.000 tons of pulp each year to outside customers at the stated 5104 price 3. What is the Pulp Divisions lowest occeptable transfer price? What is the Carton Divilons highest acceptable transfer price? What is the range of acceptable transter prices of any) between the two divisions? Are the mansgers of the Carton and Pulp Divisions likely to voliantarlly agree to a transfor price for 6,700 tons of pulp next year? 4a. Suppose the Carton Division's outside supplen droos its pice to only $93 per ton. Should the Pulp Division maet this price? 3. What is the Pulp Division's lowest acceptable transfer price? What is the Carton Division's highest acceptable transfer price? 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 6,700 tons of pulp next year? 4-a. Suppose the Carton Division's outside supplier drops its price to only $93 per ton. Should the Pulp Division meet this price? 4-b. If the Pulp Division does not meet the $93 price, what will be the effect on the profits of the company as a whole? 5. Refer to requirement 4. If the Pulp Division refuses to meet the $93 price, should the Carton Division be required to purchase from the Pulp Division ot a higher price for the good of the company as a whole? 6. Rofec to requirement 4. Assume that due to inflexible management policies, the Carton Division is required to purchase 6,700 tons of pulp each year from the Pulp Division at $104 per ton. What will be the effect on the profits of the company as a whole? Complete this question by entering your answers in the tabs below. Refer to requirement 4. It the Pulp Division refuses to meet the 593 price, should the Carton Division be required to purchase from the Pulp Division at a higher price for the good of the compsny as a whole? Shosid the Carton DNision be recuired to purchase from the Pup OMsion Complete this question by entering your answers in the tabs below. Refer to requirement 4. Assume that due to infiexible management policles, the Carton Olvision is required to purehase 6,700 tons of pu'p eoch year from the pulp Division at $104 per ton. What wiil be the effect on the profits of the company as a whole
