Hrubec Products, Incorporated, 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: Hrubec Products has just acquired a small company that manufactures paper cartons. Hrubec plans to treat its newly acquired Carton Division as a profit center. The manager of the Carton Division is currently purchasing 6,700 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 purchasing its pulp from the Pulp Division if the. managers of thet two divisions can negotiate an acceptable transfer price. Required: For (7) snd (2) below, assume the Puip Division can sell all of its pulp to outside customers for $104 per ton. 1. What is the Pulp Division's lowest acceptoble transfer price? What is the Carton Division's highest acceptabie transfer price? What is the range of acceptabie transter prices (f 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? 2. If the Pulp Division meets the price that the Carton Division is currently paying to its supplier and sells 6.700 tons of putp to the Carton Oivision eoch yeat, what wili be the effect on the profit of the Puip Divition, the Carton Olvision, and the company as a whole? For (3)- (6) below, assume that the Pulp Division is currently seling only 30,000 sons of pulp each year to outside customers at the stated \$104 price. 3. What is the Pup Division's lowest acceptable transfor price? Whot is the Canton Division's highest acceptable transfer price? What is the range of acceptoble transfer prices if enyl between the two divisions? Are the managers of the Cartan and Pup Divaions likely to voluntariy ogree to o transter price for 6700 tons of pup next year? 4 a. Suppose the Canon Divison's oulside suppler diops its price to only $93 per ton. Stould the Pulp. Division meet this price? What is the Pulp Division's lowest acceptable transfer price? What is the Carton Division's highest acceptable transfer price? What is range of acceptable transfer prices (if any) between the two divisions? Are the managers of the Carton and Pulp Divisions likely to luntarily agree to a transfer price for 6,700 tons of pulp next year? a. Suppose the Carton Division's outside supplier drops its price to only $93 per ton. Should the Pulp Division meet this price? 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 at a higher price for the good of the company as a whole? 6. Refer 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. What is the Puip Division's lowest acceptable transter price? What is the Carton Division's highest acceptable transfer price? What is the range of acceptable transter 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? Complete this question by entering your answers in the tabs below. If the Pulp Division meets the price that the Carton Division is currently paying to its supplier and sells 6,700 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? Note: Do not rourid intermediate calculations. Complete this question by entering your answers in the tabs below. What is the pulp Division's lowest acceptibie tansfer price? What is the Carton Division's highest acceptable transfer price? What is the range of acceptobie transter prices (if any) between the two divitlons? Are the managers of the Carton and Pulp Divisions likely to voluntarily agree to a transfer price for 6,700 tons of polp next year? Note: Round your answers to nearest whole dotlor amount. Complete this question by entering your answers in the tabs below. Complete this question by entering your answers in the tabs below. If the Pulp Dlvision does not meet the $93 price, what will be the effect on the profits of the company as a whole
