Answer the Following Questions Using the Information Below:
Bass Strait

question 124

Multiple Choice

Answer the following questions using the information below:
Bass Strait Oil Corporation has two divisions: Refining and Production.The company's primary product is Enkoil Oil.Each division's costs are provided below:
$$\begin{array} { l l r } \text { Production: } & \text { Variable costs per barrel of oil } & \$ 3 \\& \text { Fixed costs per barrel of oil } & \$ 2 \\\text { Refining: } & \text { Variable costs per barrel of oil } & \$ 10 \\& \quad \text { Fixed costs per barrel of oil } & \$ 12\end{array}$$
The Refining Division has been operating at a capacity of 40 000 barrels a day and usually purchases
25 000 barrels of oil from the Production Division and 15 000 barrels from other suppliers at $20 per barrel.
-Assume 200 barrels are transferred from the Production Division to the Refining Division for a transfer price of $6 per barrel.The Refining Division sells the 200 barrels at a price of $40 each to customers.What is the operating profit of both divisions together?

• A)$2400
• B)$2600
• C)$6800
• D)$3600

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Definitions:

Demographic Questions

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