This n: 1 pt 40 of 40 (o complete) Axelia Corporation has two divisions, Refinin

Question

This n: 1 pt 40 of 40 (o complete) Axelia Corporation has two divisions, Refining and Extraction. The comparys Extraction. Variable costs per barrel of oil $10 Rofining. Variable costs per barrel of oll $27 The Refining Division has bean operating at a capaity of 40,600 barrels a day and usually purchases 25,400 barrals of oll fom the Extraction Division and 15,800 barrals from other suppliers at $67 per barrel Fixed costs per barrel of oil $6 Foxed costs per barrel of oil $40 toplace a value on each barrel of oil is. 120% of ful costs? O A. $100.80 B. $10.00 OC. $56.00 O D. $1920

Explanation / Answer

The option D. $19.20 is correct.

Explanation:

The method used to place a value on each barrel of oil is 120% of full cost.

= Full Cost *120% = (Variable cost + Fixed cost )* 120% = ($10 + $6)* 120% = $16 * 120% = $19,20

The option B. Leads to gains from rapid decision making by subunit managers is correct.

Explanation:

Under decentralization the daily operations and decision-making responsibilities are assigned to middle and lower-level mangers which leans to gains from rapid decision making by subunit managers.

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