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Author Question: Axelia Corporation has two divisions, Refining and Extraction. The company's primary product is ... (Read 29 times)

jwb375

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

Extraction:Variable costs per barrel of oil$16
Fixed costs per barrel of oil$9
Refining:Variable costs per barrel of oil$26
Fixed costs per barrel of oil$38

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?
◦ $13,520
◦ $34,060
◦ $16,380
◦ $50,440


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Marked as best answer by jwb375 on Mar 6, 2021

whitcassie

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jwb375

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Reply 2 on: Mar 6, 2021
Gracias!


peter

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Reply 3 on: Yesterday
Thanks for the timely response, appreciate it

 

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