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

question 21

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 production to refining if the market price method of pricing is used?

• A)$24
• B)$32
• C)$36
• D)$40
• E)$38

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Definitions:

Stockholder Investments

Funds or assets that shareholders provide to a corporation in exchange for ownership interest.

Equity

Equity represents the ownership value held in an asset or a business by its shareholders or owners, calculated as the difference between the value of the assets and the value of the liabilities.

Net Income

The total earnings of a company after subtracting all expenses, including taxes, from its total revenues.

Investing Activities

Transactions and events related to the acquisition and disposal of long-term assets and other investments not included in cash equivalents.