Looking for assistance in my incorrect answer.
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: $23 $14 Selling price Expenses: Variable Fixed (based on a capacity of 104,000 tons per year) Net operating income 5 20 $ 3 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 31,000 tons of pulp per year from a supplier at a cost of $23 per ton, less a 10% purchase discount. Hrubec's 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. 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 31,000 tons of pulp next year? 4-a. Suppose the Carton Division's outside supplier drops its price (net of the purchase discount) to only $19 per ton. Should the Pulp Division meet this price? 4-b. If the Pulp Division does not meet the $19 price, what will be the effect on the profits of the company as a whole? 5. Refer to (4) above. If the Pulp Division refuses to meet the $19 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 (4) above. Assume that due to inflexible management policies, the Carton Division is required to purchase 31,000 tons of pulp each year from the Pulp Division at $23 per ton. What will be the effect on the profits of the company as a whole? Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req3 Req 4A Req 4B Req 5 Req 6 Refer to (4) above. Assume that due to inflexible management policies, the Carton Division is required to purchase 31,000 tons of pulp each year from the Pulp Division at $23 per ton. What will be the effect on the profits of the company as a whole? The company as a whole will have a(n) increase in profit by 207,700 Req 1 Reg1 Req 2 Req 2 Req3 Req3 Req 4A Req 4B Req5 Req6 Req6 Refer to (4) above. Assume that due to inflexible management policies, the Carton Division is required to purchase 31,000 tons of pulp each year from the Pulp Division at $23 per ton. What will be the effect on the profits of the company as a whole? The company as a whole will have increase a(n) profit by 207,700
