Question

The informal management control system includes the shared values, loyalties, and mutual commitments among members of the organization, the company's culture, and the unwritten norms about acceptable behavior for managers and other employees.

Briefly explain the formal and informal management systems and enlist their components.

Axelia Corporation has two divisions, Refining and Extraction. The company's primary product is Luboil Oil. Each division's costs are provided below:

Extraction	Variable costs per barrel of oil	$7
	Fixed costs per barrel of oil	$5
Refining	Variable costs per barrel of oil	$28
	Fixed costs per barrel of oil	$32

The Refining Division has been operating at a capacity of 40,000 barrels a day and usually purchases 25,000 barrels of oil from the Extraction Division and 15,000 barrels from other suppliers at $60 per barrel.

What is the transfer price per barrel from the Extraction Division to the Refining Division, assuming the method used to place a value on each barrel of oil is 180% of variable costs?

Answer 1

Transfer price per barrel from the Extraction Division to the Refining Division is = Variable cost * 180 %

Transfer price per barrel from the Extraction Division to the Refining Division is = (7*180%)

Transfer price per barrel from the Extraction Division to the Refining Division is = $ 12.60/.