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Winnie Ice Cream based in Paris, France has two divisions: Transportation and Production, The Transportation Division purchases milk from a Dutch dairy company located in
Winnie Ice Cream based in Paris, France has two divisions: Transportation and Production, The Transportation Division purchases milk from a Dutch dairy company located in Amersfoort and also transports the milk to Paris. The Production division uses milk as an input to produce high quality ice cream. The following Information refers to the Transportation Division for the year 2020: . Purchase price of 1 liter of milk E 0.5 . Variable costs per 1 liter of milk E 0.1 . Fixed costs for 8 liters of milk E 1.6 In addition to the information above, the Transportation Division uses the cost plus a mark-up transfer price. The mark-up is 50% based on the full cost per unit. Besides, the following information is given regarding the Production Division for the year 2020: . External purchase price of 1 liter of milk from outside suppliers E 0.7 . Variable costs per 1 liter of ice cream E 0.5 . Fixed costs per 4 liters of ice cream E 3.6 . External market price to outside parties per 1 liter of high quality ice cream E 13 Now let us assume that the Production Division buys 50000 liters of milk from the Transportation Division. The Production Division converts these 50000 liters of milk into 48500 liters of high quality ice cream and sells them to Albert Heijn. Albert Heijn sells 1 liter of ice cream for E16 per liter. What is the cost plus a mark-up transfer price of 1 liter of milk
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