q 5

Slippery Oil Corp. has two divisions, Refining and Production. The company's primary product is Clean Oil Each division's costs are provided below Refining Variable costs per litre of oil Fixed costs per litre of oil $ 19 20 58 40 Production Variable costs per litre of oil Fixed costs per litre of oil $9.60 $4.20 The Production Division is able to sell the oil to other areas for $26 per litre. The Refining Division has been operating at a capacity of 100,000 litres a day, using oil from the Production Division and oil purchased from other suppliers. The Refining Division usually purchases 60,000 litres of oil on average, from the Production Division and 40,000 litres, on average from other suppliers at $30/litre What is the Refining Division's operating income if 200 litres of oil are sold at $120 /litre and 250 litres are transferred in? Assume the transfer price is based on 150% of variable costs O A. $8,500 B. $14,880 OC. $15,600 OD. $6,825 O E. $19,500