Axelia Corporation Has Two Divisions,Refining and Extraction

question 82

Multiple Choice

Axelia Corporation has two divisions,Refining and Extraction.The company's primary product is Luboil Oil.Each division's costs are provided below:

The Refining Division has been operating at a capacity of 40,900 barrels a day and usually purchases 25,600 barrels of oil from the Extraction Division and 15,400 barrels from other suppliers at $64 per barrel.
Assume 260 barrels are transferred from the Extraction Division to the Refining Division for a transfer price of $26 per barrel.The Refining Division sells the 260 barrels at a price of $220 each to customers.What is the operating income of both divisions together?

• A)$13,520
• B)$34,060
• C)$16,380
• D)$50,440

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