Question: Peppertree Company has two divisions East and West Division East

Peppertree Company has two divisions, East and West. Division East manufactures a component that Division West uses. The variable cost to produce this component is $2.00 per unit; full cost is $2.75. The component sells on the open market for $3.10. Assuming Division East has excess capacity, what is the lowest price Division East will accept for the component? What is the highest price that Division West will pay for it?


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  • CreatedFebruary 27, 2015
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