Refer to Plank Inc. Assume the following:
∙ Paint Division can make 1,000,000 L per year, and expects to produce 800,000 L.
∙ 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).
Required:
A. The maximum transfer price per litre of paint is $__________________.
B. The minimum transfer price per litre of paint 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: $__________________

Question

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The Answer of Refer to Plank Inc. Assume the following:
∙ Paint Division can make 1,000,000 L per year, and expects to produce 800,000 L.
∙ 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).
Required:
A. The maximum transfer price per litre of paint is $__________________.
B. The minimum transfer price per litre of paint 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: $__________________

Refer to Plank Inc. Assume the Following