Rexon Corporation has two divisions, Refining and Extraction. The company's primary product is Motor Oil. Each division's costs are provided below: Extraction:Variable cost / barrel$ 6.30 Fixed cost / barrel$ 4.50Refining:Variable cost / barrel$ 25.20 Fixed cost / barrel$ 28.80 Assume 200 barrels are transferred from the Extraction Division to the Refining Division for a transfer price of $18 per barrel. The Refining Division sells the 200 barrels at a price of $108 each to customers. What is the operating income of both divisions together? Multiple Choice$8,640$11,700$16,560$15,300

Income statement: The income statement shows the company's revenues and expenses earned during a…

Answered: Rexon Corporation has two divisions,…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Rexon Corporation has two divisions, Refining and Extraction. The company's primary product is Motor Oil. Each division's costs are provided below:

Extraction:	Variable cost / barrel	$ 6.30
	Fixed cost / barrel	$ 4.50
Refining:	Variable cost / barrel	$ 25.20
	Fixed cost / barrel	$ 28.80

Assume 200 barrels are transferred from the Extraction Division to the Refining Division for a transfer price of $18 per barrel. The Refining Division sells the 200 barrels at a price of $108 each to customers. What is the operating income of both divisions together?

Multiple Choice

$8,640

$11,700

$16,560

$15,300

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