Oscar Industries requires 2,400 units of turntables. The glass and ceramic products division already produces similar turntables

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Oscar Industries requires 2,400 units of turntables. The glass and ceramic products division already produces similar turntables for the external market and sells them at an industry-wide established price of $36. The company, so far, has maintained negotiated transfer-pricing policy across the organization. The glass and ceramic products division has enough excess capacity to produce additional 4,000 units of turntables. Its variable cost of production is $25. 

What is the natural bargaining range for a transfer price between the two divisions? Explain why no price below your range would be acceptable. Also explain why no price above your range would be acceptable.

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Related Book For  book-img-for-question

Introduction To Management Accounting

ISBN: 9781292412566

17th Edition, Global Edition

Authors: Charles Horngren, Gary L Sundem, Dave Burgstahler

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