Answer the Following Questions Using the Information Below:
Axelia Corporation

question 98

Multiple Choice

Answer the following questions using the information below:
Axelia Corporation has two divisions, Refining and Extraction. The company's primary product is Luboil Oil. Each division's costs are provided below:
$$\begin{array} { l c c } \text { Extraction: } & \text { Variable costs per barrel of oil } & \$ 7 \\& \text { Fixed costs per barrel of oil } & \$ 5 \\\text { Refining: } & \text { Variable costs per barrel of oil } & \$ 28 \\& \text { Fixed costs per barrel of oil } & \$ 32\end{array}$$ 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 Extraction Division and 15,000 barrels from other suppliers at $60 per barrel.
-What is the transfer price per barrel from the Extraction Division to the Refining Division,assuming the method used to place a value on each barrel of oil is 110% of full costs?

• A) $12.00
• B) $13.20
• C) $44.00
• D) $79.00

---

Definitions:

Balance Theory

A psychological theory suggesting that individuals strive for mental consistency among their beliefs, attitudes, and sentiments, and will change or eliminate beliefs to achieve balance.

Environmental Activist

An individual who actively promotes the protection and preservation of the environment through various actions and campaigns.

Cognitive Dissonance

The mental discomfort experienced by an individual who holds two or more contradictory beliefs, ideas, or values at the same time, often leading to an alteration in one's beliefs to reduce the discomfort.

Jetta

A compact car model produced by the German automobile manufacturer Volkswagen.