Sweeter Side produces hot cocoa mix. The company has two divisions, each operating as a profit center. The transportation division purchases raw cocoa in the lvory Coast and transports it to the mixing division in Atlanta, Georgia. The moxing division processes the raw cocoa into the cocoa mix. It takes fwo pounds of raw cocoa to yieki one pound of cocos mix. Variable and fixed costs per pound of raw cocoa in the transportabion division and variable and foxed cosis per pound of cocoa mix in the mixing division area as foliows: (Click the icon to viow the data) The market prioe for a pound of raw cocoa supplied to the mxing division in Atlanta is $18. Sweeter Side can sell each pound of hot cocoa mix for \$60. Read the tequirements. Requirement 1. What are the minimum and maximum transfer peices per pound of raw cocoa transported to the mixing division at which both divisions are wiling to transact with each other? Assume the transportation division has unused capocity to transport raw cocoat to the moxing division Minimum transfer price = Maximum transfer price = Data table 1. What aro the minmum and manimum transter peicos por pound of raw cocoa transpoted to tho mining division at which both divisions aro wiling to transact with each othan? Assume the transportation divisich has unused capacity to transport raw cocoa lo the mixing division. 2. Reter to your answor in requiremont 1 . The managemont of Sweeter Side is trying to docide on the spocific transter price within the bounds identifiod in requirement 1 . Jay Luciano, Sweeler Side's CEO, is supgesting to split the difleronce botwoen the maximum and the minimum transfor price evenly. What is the transfor price under this scenario? What is the contributicn margin per pound of row cocoa for the transportation division? What is the contribution margin por pound of cocoa mix for the mioung division? 3. Linda Buco, Sweeter Side's CFO, disagres wht Jar Luciano's suggostion to spit the diflerence evenly She argues that the difforenoe tiotween the maximum and minemum transier price should be proraled basod on the value of the work contibuted by each of the divisions to the final product a. What is the value of the work contributed by each of the divisions fowards a pound of cocoa mix? lgnore foxed costs b. What is the transfer price if the difference between the maximum and the minimans transfer price (idontifiod in recuirement 1 ) is proratad based on the relative value of the work contrbuted by each of the divisions (idontitiod in requirement 3a)? What is the corthbution margin per pound of tav cocos for the transportation drision? What is the contribution magin por pound of cocoa max for the mixing division? c. Which transfes price, the ono ideritiod in requirement 2 or the one idertfod in requlerment 30 , do you think Sweeter Side should use
