Scala Oil has the following information available regarding its three divisions: production, transportation and refining: Production (Crude Oil) Transport (Crude Oil) Refining (Petrol) Variable costs: $2/barrel (of oil) Fixed costs: $6/barrel Full Cost: $8/barrel Variable costs: $1/barrel Fixed costs: $3/barrel Full Cost: $4/barrel Variable costs: $8/barrel Fixed costs: $6/barrel Full Cost: $14/barrel The division sells to the transport division. The external market will pay $13 a barrel. The division buys from the production division and sells to the refining division; the market price is $18 a barrel The external market will pay $52 a barrel. It refines at a rate of 2 barrels of crude oil to 1 barrel of petrol. For an output of 100 barrels of crude oil, produce profit statements indicating revenues, total costs including transferred in costs and profits for each division using: i) market prices transfer pricing.
Scala Oil has the following information available regarding its three divisions: production, transportation and refining:
|
Production (Crude Oil) |
Transport (Crude Oil) |
Refining (Petrol) |
Variable costs: $2/barrel (of oil)
Fixed costs: $6/barrel Full Cost: $8/barrel
Variable costs: $1/barrel
Fixed costs: $3/barrel Full Cost: $4/barrel
Variable costs: $8/barrel
Fixed costs: $6/barrel Full Cost: $14/barrel
|
The division sells to the transport division. The external market will pay $13 a barrel. |
The division buys from the production division and sells to the refining division; the market price is $18 a barrel |
The external market will pay $52 a barrel. |
For an output of 100 barrels of crude oil, produce profit statements indicating revenues, total costs including transferred in costs and profits for each division using:
i) market prices transfer pricing.
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