Aerated Water Company Makes Internal Transfers at 175% of Full

question 143

Multiple Choice

Aerated Water Company makes internal transfers at 175% of full cost. The Soda Refining Division purchases 30,500 containers of carbonated water per day, on average, from a local supplier, who delivers the water for $31 per container via an external shipper. To reduce costs, the company located an independent supplier in Missouri who is willing to sell 30,500 containers at $28 each, delivered to Aerated Water Company's Shipping Division in Missouri. The company's Shipping Division in Missouri has excess capacity and can ship the 30,500 containers at a variable cost of $8.00 per container. What is the total cost to Aerated Water Company if the carbonated water is purchased from the local supplier?

• A) $945,500
• B) $892,125
• C) $2,318,000
• D) $1,654,625

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