Plank Inc.has a division that makes paint and another division that constructs subdivisions.The paint division incurs the following costs for one litre of paint:
The Paint Division can make 1,000,000 L per year,and expects to produce 800,000 L next year.The Construction Division currently buys 200,000 L of paint from an outside supplier for $5.30 per litre (the same price that the Paint Division receives).
A. The maximum transfer price per litre of paint is _____.
B. The minimum transfer price per litre of aint is _____.
C. Assume that the transfer takes place at per litre; calculate the amount by which each of the following will be better off with the transfer than without it.
Paint Division: _____
Construction Division: _____
Plank, Inc., as a whole: $_____
Correct Answer:
Verified
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