Two Wheel Green Machines manufactures and sells bicycles. The tire manufacturing division sells its product to customers
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Question:
Two Wheel Green Machines manufactures and sells bicycles. The tire manufacturing division
sells its product to customers for $ each. The variable cost per tire is $ and fixed costs per
tire are $ The bicycle assembly division has been buying tires from an outside source for $
each. Upper management wants the tire division to transfer tires to the assembly division
within the company at a price of $ per tire. The tire division is operating at full capacity.
Tasks: Answer the following questions:
a What is the minimum transfer price?
b What is the maximum transfer price?
c How much will the tire manufacturing division gainlose by selling its tires at a set transfer price of $ per tire?
d How much will the assembly division gainlose by buying the tire at a set transfer price of $ per tire?
Related Book For
Managerial Accounting Tools for business decision making
ISBN: 978-1118096895
6th Edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
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