Crush Company Makes Internal Transfers at 155% of Full Cost

question 107

Multiple Choice

Crush Company makes internal transfers at 155% of full cost. The Soda Refining Division purchases 41,000 containers of carbonated water per day, on average, from a local supplier, who delivers the water for $58 per container via an external shipper. To reduce costs, the company located an independent supplier in Illinois who is willing to sell 41,000 containers at $38 each, delivered to Crush Company's Shipping Division in Missouri. The company's Shipping Division in Missouri has excess capacity and can ship the 41,000 containers at a variable cost of $12.50 per container. What is the total cost of purchasing the water from the Illinois supplier and shipping it to the Soda Division?

• A) $1,558,000
• B) $2,070,500
• C) $2,378,000
• D) $512,500

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Definitions:

Nolen-Hoeksema

A psychologist known for her work on gender differences in depression and the rumination response style theory.

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Etiology

Etiology is the study of the causes or origins of diseases or psychological conditions.