Plank IncHas a Division That Makes Paint and Another Division That

question 17

Essay

Plank Inc.has a division that makes paint and another division that constructs subdivisions.The paint division incurs the following costs for one litre of paint:
The Paint Division can make 1,000,000 L per year,and expects to produce 800,000 L next year.The Construction Division currently buys 200,000 L of paint from an outside supplier for $5.30 per litre (the same price that the Paint Division receives).
$\begin{array}{lr}\text { Direct materials } & \$ 1.10 \\\text { Direct labour } & 1.45 \\\text { Variable overhead } & 0.90 \\\text { Fixed overhead } & 1.15 \\\text { Total } & \$ 4.60\end{array}$ A. The maximum transfer price per litre of paint is $\$$ _____.
B. The minimum transfer price per litre of $p$ aint is $\$$ _____.
C. Assume that the transfer takes place at $\$ 5$ per litre; calculate the amount by which each of the following will be better off with the transfer than without it.
Paint Division: $\$$ _____
Construction Division: $\$$ _____
Plank, Inc., as a whole: $_____

---

Definitions:

Qualitative Data

Information that cannot be measured with numbers, often related to descriptions, qualities, or opinions.

Probing Questions

Questions designed to elicit more detailed and in-depth responses from a conversation or interview partner.

Secondary Data

Marketing data that have been gathered, tabulated, and made available by an outside source.

Secondary Information

Data that has been collected previously by someone else, used for research or analysis.