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Hrubec Products, Inc., operates a Pulp Division that manufactures wood pulp for use in the...

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Accounting

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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: Fixed based on a 96.000 tons per year) Net operating income Hrubec Products has just acquired a small company that manufactures paper cartons. This company will be treated as a division of Hrubec with full profit responsibility. The newly formed Carton Division is currently purchasing 31,000 tons of pulp per year from a supplier at a cost of $23 per ton, less a 10% purchase discount. Hrubec's president is anxious for the Carton Division to begin purchasing its pulp from the Pulp Division if an acceptable transfer price can be worked out. Required: For (1) and (2) below, assume that the Pulp Division can sell all of its pulp to outside customers for $23 per ton. What is the minimum Transfer Price at which Pulp is willing to sell within the firm? Transfer price a 1b What is the maximum Transfer Price at which Carton is willing to buy within the firm? (Round your answer to 2 decimal places.)

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