Answer the Following Questions Using the Information Below:
NSW Farmers

question 91

Multiple Choice

Answer the following questions using the information below:
NSW Farmers Coop has two divisions: Distribution and Production.The company's primary product is fertiliser.Each division's costs are provided below:
$$\begin{array} { l r l } \text { Production: } & \text { Variable costs per kilo } & \$ 0.05 \\& \text { Fixed costs per kilo } & \$ 0.25 \\\text { Distribution: } & \text { Variable costs per kilo } & \$ 0.03 \\& \text { Fixed costs per kilo } & \$ 0.02\end{array}$$ The Distribution Division has been operating at a capacity of 4 000 000 kilos a week and usually purchases 2 000 000 kilos from the Production Division and 2 000 000 kilos from other suppliers at $0.45 per kilo.
-What is the transfer price per kilo from the Production Division to the Distribution Division,assuming the method used to place a value on each kilo of fertiliser is 120% of full costs,what is the transfer price per kilo from the Production Division to the Distribution Division?

• A)$0.55
• B)$0.36
• C)$0.30
• D)$0.45

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Definitions:

Form 1040

The official form issued by the IRS that taxpayers fill out annually to report their earnings for the year.

Casualty Loss

A financial loss resulting from sudden, unexpected, or unusual events such as natural disasters, thefts, or accidents.

Insurance Company

A business entity that offers risk management in the form of insurance policies, providing coverage for various risks in exchange for premiums.

Reimbursed

The act of repaying someone for expenses they have incurred on behalf of someone else or a business.