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Sandler Company makes internal transfers at 180% of full cost. The Soda Refining division purchases 30,000 containers of carbonated water per day, on average, from a local supplier who delivers the water for $30 per container via an external shipper. To reduce costs, the company located an independent producer in Ohio who is willing to sell 30,000 containers at $20 each, delivered to Sandler Company's shipping division in Ohio. The company's Shipping Division in Ohio has excess capacity and can ship the 30,000 containers at a variable cost of $2.50 per container. is the total cost to Sandler Company if the carbonated water is purchased from the local supplier.
Net Present Value
A financial metric used to evaluate the profitability of an investment, calculated by subtracting the present value of cash outflows from the present value of cash inflows over a period of time.
Salvage Value
The determined residual amount of an asset at the cessation of its utility.
Net Cash Inflows
The total amount of cash received minus cash paid out over a specific period, not including non-cash expenses.
Straight-Line Method
A method of depreciation that allocates an equal portion of an asset’s cost to each year of its useful life.
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