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## What is the transfer price per barrel from the Production Division

\$15.99

\$15.99

What is the transfer price per barrel from the Production Division THE FOLLOWING INFORMATION APPLIES TO QUESTIONS 1 THROUGH 3. Dakoil Corporation has two divisions, Refining and Production. The company’s primary product is Enkoil Oil. Each division’s costs are provided below: Production: Variable costs per barrel of oil \$ 3 Fixed costs per barrel of oil \$ 2 Refining: Variable costs per barrel of oil \$10 Fixed costs per barrel of oil \$12 The Refining Division has been operating at a capacity of 40,000 barrels a day and usually purchases 25,000 barrels of oil from the Production Division and 15,000 barrels from other suppliers at \$20 per barrel. 1. What is the transfer price per barrel from the Production Division to the Refining Division, assuming the method used to place a value on each barrel of oil is 180% of variable costs? a. \$5.40 b. \$9.00 c. \$18.00 d. \$23.40 2. What is the transfer price per barrel from the Production Division to the Refining Division, assuming the method used to place a value on each barrel of oil is 110% of full costs? a. \$5.50 b. \$22.00 c. \$24.20 d. \$29.70 3. Assume 200 barrels are transferred from the Production Division to the Refining Division for a transfer price of \$6 per barrel. The Refining Division sells the 200 barrels at a price of \$40 each to customers. What is the operating income of both divisions together? a. \$2,400 b. \$2,600 c. \$3,600 d. \$6,800 Business Management Assignment Help, Business Management Homework help, Business Management Study Help, Business Management Course Help

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