Diaz Company Makes Internal Transfers at 180% of Full Cost

Multiple Choice

Diaz Company makes internal transfers at 180% of full cost. The Soda Refining division purchases 30,000 containers of carbonated water per day, on average, from a local supplier who delivers the water for $30 per container via an external shipper. To reduce costs, the company located an independent producer in Iowa who is willing to sell 30,000 containers at $20 each, delivered to Diaz Company's shipping division in Iowa. The company's Shipping Division in Iowa has excess capacity and can ship the 30,000 containers at a variable cost of $2.50 per container. is the total cost of purchasing the water from the Iowa supplier and shipping it to the Soda Division.

A) $1,080,000
B) $600,000
C) $1,215,000
D) $675,000