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 Carton Division willdecrease by: Profits of the company as a whole will increase by: |
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