Assume a company has two divisions, Division A and Division B. Division A has provided the...
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Assume a company has two divisions, Division A and Division B. Division A has provided the following information regarding the one product that it manufactures and sells on the outside market: Selling price per unit (on the outside market) $ 62 Variable cost per unit $ 43 $ 4 Fixed costs per unit (based on capacity) Capacity in units 20,000 Division B could use Division A's product as a component part in the manufacture of 4,000 units of its own newly-designed product. Division 8 has received a quote of $58 from an outside supplier for a component part that is comparable to the one that Division A makes. If the company's divisional managers are evaluated based their division's profits and Division A is currently selling 18,000 units on the outside market, what is the range of acceptable transfer prices between the two divisions? Assume a company has two divisions, Division A and Division B. Division A has provided the following information regarding the one product that it manufactures and sells on the outside market: Selling price per unit (on the outside market) $ 62 Variable cost per unit $ 43 $ 4 Fixed costs per unit (based on capacity) Capacity in units 20,000 Division B could use Division A's product as a component part in the manufacture of 4,000 units of its own newly-designed product. Division 8 has received a quote of $58 from an outside supplier for a component part that is comparable to the one that Division A makes. If the company's divisional managers are evaluated based their division's profits and Division A is currently selling 18,000 units on the outside market, what is the range of acceptable transfer prices between the two divisions?
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Solution Spare capacity in Division A 2000018000 2000 units Loss of regular ... View the full answer
Related Book For
Management Accounting Information for Decision-Making and Strategy Execution
ISBN: 978-0137024971
6th Edition
Authors: Anthony A. Atkinson, Robert S. Kaplan, Ella Mae Matsumura, S. Mark Young
Posted Date:
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