Problem 13.10 (Divisional Transfer-Determining actual as well as revised schedule of production of the two Divisions and the quantity to be transferred between the two Divisions) Two divisions of a company, both manufacturing the same product with same grade and quality are located at two distant places A and B. The annual output of the division at A is 6,000 tonr.es (80% capacity) and that of division B is 7,500 tonnes (60% capacity). The basic raw material used is available rocally at both the places, but limited to 3,000 tonnes per annum @ Rs. 900 per tonne at division A and 8,000mnes per annum @ Rs. 1,000 per tonne at division B. Any additional requirement will have to be purchased from other markets at a rate of Rs. 1,150 per tonne. F.O.R. at either division. Variable costs at each division are constant per tonne of output. For every 100 tonnes of output, 80 tonnes of basic raw material is required. The details of other annual variable and fixed costs of the divisions are as under: Division A Division B Rs. in lakhs Rs. in lakhs Other variable cost (excluding raw material) 78.00 96.00 Fixed cost 50.00 60.00 You are required to (a) determine for each tonne of output, the raw material cost, other variable cost and total cost, in respect of each division, give details of workings; (b)determine the quantity of production that could be transferred between the two divisions, if the company desires to fully utilise the available local supplies of raw material to reduce cost of production, keeping the total production of both the divisions put together, the same as at present; (c) determine the revised schedule of production at both the divisions based on the answer to (b) above and identify the cost saving