E$10-16($Algo$)$ Determining Transfer Price $[$LO $10-6]$

The Molding Division of Cotwold Company manufactures a plastic casing used by the Assembly Division. This casing is also sold to

external customers for $$39$ per unit. Variable costs for the casing are $$26$ per unit, and fixed cost is $$6$ per unit. Cotwold executives

would like for the Molding Division to transfer $22,000$ units to the Assembly Division at a price of $$33$ per unit. Assume that the

Molding Division has enough excess capacity to accommodate the request.

Required:

Should the Molding Division accept the $$33$ transfer price proposed by management?

Calculate the effect on the Molding Division's net income if it accepts the $$33$ transfer price.

Complete this question by entering your answers in the tabs below.

Required $1$

Should the Molding Division accept the $$33$ transfer price proposed by management?

Should the Molding Division accept the $$33$ transfer price proposed by management?