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 $10.00 Fixed costs per barrel of oil $4.00 Refining: Variable costs per barrel of oil $26.00 Fixed costs per barrel of oil $40.00 The Refining Division has been operating at a capacity of 40,300 barrels a day and usually purchases 26,000 barrels of oil from the Extraction Division and 15,800 barrels from other suppliers at $66.00 per barrel. Assume 220 barrels are transferred from the Extraction Division to the Refining Division for a transfer price of $24.00 per barrel. The Refining Division sells the 220 barrels at a price of $200.00 each to customers. What is the operating income of both divisions together? A; $26,400.00 B. $11,880.00 C. $ 10,560.00 D. $38,720.00
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 $10.00 Fixed costs per barrel of oil $4.00 Refining: Variable costs per barrel of oil $26.00 Fixed costs per barrel of oil $40.00 The Refining Division has been operating at a capacity of 40,300 barrels a day and usually purchases 26,000 barrels of oil from the Extraction Division and 15,800 barrels from other suppliers at $66.00 per barrel. Assume 220 barrels are transferred from the Extraction Division to the Refining Division for a transfer price of $24.00 per barrel. The Refining Division sells the 220 barrels at a price of $200.00 each to customers. What is the operating income of both divisions together? A; $26,400.00 B. $11,880.00 C. $ 10,560.00 D. $38,720.00
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 $10.00
Fixed costs per barrel of oil $4.00
Refining: Variable costs per barrel of oil $26.00
Fixed costs per barrel of oil $40.00
The Refining Division has been operating at a capacity of 40,300
barrels a day and usually purchases 26,000
barrels of oil from the Extraction Division and 15,800
barrels from other suppliers at $66.00 per barrel.
barrels a day and usually purchases 26,000
barrels of oil from the Extraction Division and 15,800
barrels from other suppliers at $66.00 per barrel.
Assume 220 barrels are transferred from the Extraction Division to the Refining Division for a transfer price of $24.00 per barrel. The Refining Division sells the 220 barrels at a price of $200.00
each to customers. What is the operating income of both divisions together?
each to customers. What is the operating income of both divisions together?
A; $26,400.00
B. $11,880.00
C. $ 10,560.00
D. $38,720.00
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