Media Inc. has two divisions: Rose that manufactures state-of-the-art DVD players and Sany that manufactures televisions....

 

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Media Inc. has two divisions: Rose that manufactures state-of-the-art DVD players and Sany that manufactures televisions. The following information is available for Rose's DVD player: variable cost per unit $150; fixed costs per unit $75; and a selling price of $400 to outside customers. Rose is currently operating at full capacity Top management would like Rose to provide 15,000 DVD players per year to Sany TV at a transfer price of $330 each. Sany currently purchases DVD players from an outside supplier for $320 each. Tasks: Answer the following questions: a) What is the minimum transfer price? 3 marks b) What is the maximum transfer price? I mark c) How much will the Rose division gain/lose by selling its DVD players at a set transfer price of $330 each? 2 marks d) How much will the Sany division gain/lose by buying its DVD players at a set transfer price of $330 each? 2 marks Media Inc. has two divisions: Rose that manufactures state-of-the-art DVD players and Sany that manufactures televisions. The following information is available for Rose's DVD player: variable cost per unit $150; fixed costs per unit $75; and a selling price of $400 to outside customers. Rose is currently operating at full capacity Top management would like Rose to provide 15,000 DVD players per year to Sany TV at a transfer price of $330 each. Sany currently purchases DVD players from an outside supplier for $320 each. Tasks: Answer the following questions: a) What is the minimum transfer price? 3 marks b) What is the maximum transfer price? I mark c) How much will the Rose division gain/lose by selling its DVD players at a set transfer price of $330 each? 2 marks d) How much will the Sany division gain/lose by buying its DVD players at a set transfer price of $330 each? 2 marks