Crush Company Makes Internal Transfers at 160% of Full Cost

Multiple Choice

Crush Company makes internal transfers at 160% of full cost.The Soda Refining Division purchases 40,000 containers of carbonated water per day,on average,from a local supplier,who delivers the water for $40 per container via an external shipper.To reduce costs,the company located an independent supplier in Illinois who is willing to sell 40,000 containers at $30 each,delivered to Crush Company's Shipping Division in Missouri.The company's Shipping Division in Missouri has excess capacity and can ship the 40,000 containers at a variable cost of $4.50 per container.What is the total cost of purchasing the water from the Illinois supplier and shipping it to the Soda Division?

A) $1,200,000
B) $1,380,000
C) $1,600,000
D) $180,000