brittanysanders
brittanysanders
03.04.2020 • 
Business

Axelia Corporation has two divisions, Refining and Extraction. The company's primary product is Luboil Oil. Each division's costs are provided below: Extraction Variable costs per barrel of oil $7 Fixed costs per barrel of oil $5 Refining Variable costs per barrel of oil $28 Fixed costs per barrel of oil $32 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 Extraction Division and 15,000 barrels from other suppliers at $60 per barrel. What is the transfer price per barrel from the Extraction Division to the Refining Division, assuming the method used to place a value on each barrel of oil is 180% of variable costs?

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