Problem 11A-4 Transfer Price with an outside Market CLO11-51 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 $24 Selling price Expenses Variable $15 Fixed (based on a capacity of 99,000 tons per year) 6 21 Net operating income $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 27,000 tons of pulp per year from a supplier at a cost of $24 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 Required: For (1) and (2) below, assume that the Pulp Division can sell all of its pulp to outside customers for $24 per ton. 1-a. What is the minimum Transfer Price at which Pulp is willing to sell within the firm? Variable cost per unit Total contribution margin on lost sales 0 No. of units transferred S 15 Transfer price