Use the Information Below to Answer the Following Question(s)

question 56

Multiple Choice

Use the information below to answer the following question(s) .Blackoil Corp.has two divisions, Refining and Production.The company's primary product is Clean Oil.Each division's costs are provided below:
The Production Division is able to sell the oil to other areas for $24 per litre.The Refining Division has been operating at a capacity of 80,000 litres a day, using oil from the Production Division and oil purchased from other suppliers.The Refining Division usually purchases 50,000 litres of oil, on average, from the Production Division and 30,000 litres, on average, from other suppliers at $40/litre.
-What is the transfer price per litre from the Production Division to the Refining Division assuming the method is 120% of full costs?

• A)$16.80
• B)$12.00
• C)$9.50
• D)$7.20
• E)$12.50

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