Hrubec Products, Inc., operates a Pulp Division that manufactures wood pulp for use in the...
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Accounting
Hrubec Products, Inc., operates a Pulp Division that manufactures wood pulp for use in the production of various paper goods. Revenue and costs associated with a ton of pulp follow:
Sssume that the Pulp Division is currently selling only 30,000 tons of pulp each year to outside customers at the stated $70 price.
Requirement 4:
(a)
Suppose that the Carton Division's outside supplier drops its price (net of the purchase discount) to only $59 per ton.
How much potential profit will the Pulp Division lose if the $59 price is not met?
Requirement 6:
Refer to Requirement 4 above. Assume that due to inflexible management policies, the Carton Division is required to purchase 5,000 tons of pulp each year from the Pulp Division at $70 per ton. What will be the effect on the profits of the company as a whole?
Profits of the Pulp Division will increase by:
Profits of the Carton Division willdecrease by:
Profits of the company as a whole will increase by:
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