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The question has been answered before, but it has not been answered correctly Asphalt Binder Asphalt base is also a product of crude oil refining
The question has been answered before, but it has not been answered correctly
Asphalt Binder Asphalt base is also a product of crude oil refining and is used to make a product called binder that is shipped out as a finished product from the Asphalt Division of Pembina Oil. The binder product is sold to construction companies and is added to aggregate (sand-gravel) on construction sites to make roads. This Asphalt Division prefers to purchase raw asphalt base from Olander's Division but can buy their raw materials from a different supplier for $1.15 per litre. They could be persuaded to offer Olander the same price but will not pay more. Similarly, Olander prefers to sell to their in-house Asphalt Division, but can sell to international asphalt makers on the open market. The conversion cost of turning asphalt base into binder is $0.15 per litre and asphalt binder is sold by the barrel for $320 per barrel. Question 3. What is the total cost to produce a litre of asphalt base assuming $75 per barrel cost for crude? What would be the contribution per litre for Olander's Division and the Asphalt Division respectively if Olander set the transfer price at cost? What would be the contribution per litre for Olander's Division and the Asphalt Division if they set the price at $1.15 per litre. Create a chart to display the above informationStep by Step Solution
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