Ohio Oil Corporation has two divisions, Refining and Production. The company's primary product is O Oil. Each division's costs are provided below:

Production: Variable costs per barrel of oil $ 9

Fixed costs per barrel of oil $ 6

Refining: Variable costs per barrel of oil $30

Fixed costs per barrel of oil $36

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 $60 per barrel.

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?

Answer rating: 100% (QA)

The transfer price per barrel from the Production Division to the Refining Divis... View the full answer