Solution to question 4 is provided above, please help me with question 6

Pembina Oil Karl Olander runs a large refinery in the Pembina oil field in Drayton Valley area of Alberta. The refinery was a division of Pembina Oil, which removes crude oil from the land through their Extraction Division, and refines and sells products through Olander's Division (Refinery Division), and sells to internal and external buyers. An example of an internal buyer was the Commercial Asphalt Division. Olander's Refinery Division can purchase crude oil from the in-house Extraction Division or third-party sellers in the region, the same way they can sell to internal or external buyers. Refining oil involves heating the crude oil to separate out components based on their boiling points, see Exhibit 1 for more information on oil refinement. Olander's Refining Division heats and separates the crude oil. Then they can sell the petroleum products to various distributors such as gas stations, jet fuel firms, and asphalt producers. In Olander's Division, 45% of crude oil becomes gasoline, 35% becomes jet fuel, and 20% goes into asphalt production. Olander's refining facility typically processes 1 million crude oil barrels per year 1. The production process uses little direct labour, but Olander attributes $4.5 million of direct labour per year to the barrel loaders who empty crude oil barrels into the refinery process and allocates these direct labour costs proportionally to product outcome. The total overhead cost of operating the refinery is $82 million per year which also would be distributed proportionally to product outcomes. Jet Fuel Pembina Oil sells jet fuel directly to Edmonton International Airport's fuel service business. This fuel is then sold to various airlines and local pilots. Given demand in the market, Olander feels they could price the fuel using total cost + pricing. For simplicity, Pembina Oil only produces gasoline, jet fuel and asphalt base. Exhibit 2 Expected sales price and external demand forecast Exhibit344 Standard and real cost information Here is a step-by-step recommendation based on the information and scenarios provided: 1. Calculate Total Cost to Produce a Litre of Asphalt Base: - Cost of crude oil per litre: $0.47 - Conversion cost per litre: $0.15 - Total Cost =$0.47+$0.15=$0.62 per litre 2. Evaluate Scenario 2 (Transfer Price =$1.15 per Litre): - Contribution per litre for Olander's Division: - \$1.15 (Transfer Price) - \$0.62 (Total Cost) =$0.53 - Contribution per litre for Asphalt Division: - $2.00 (Selling Price) $1.15 (Transfer Price) =$0.85 3. Compare Contributions: - Contribution for Olander's Division: $0.53 - Contribution for Asphalt Division: $0.85 4. Recommendation: - It's advisable to sell asphalt base in-house. - Set the in-house selling price at the transfer price of $1.15 per litre. Question 6. Assume that your answer to Question 4 is correct. Olander could hire a new sales agent who would increase demand to $1.50 per litre for the entire amount of asphalt base produced annually. The agent would take a 5% sales commission and a $100,000 base salary and $20,000 in one time product training. Perform an incremental analysis assuming your answer to Question 4 is the status quo. TotalCosts The costs detailed in the previous paragraphs are standard costs, however Olander had gathered some actual cost information and more details about the standard costs in Exhibit 32