Question: Off Road, Inc., has two divisions, A and B , which manufacture expensive bicycles. Division A produces the bicycle frame, and Division B assembles the
Off Road, Inc., has two divisions, A and B which manufacture expensive bicycles. Division A produces the
bicycle frame, and Division B assembles the rest of the bicycle onto the frame. There is a market for both the
subassembly and the final product. Each division has been designated as a profit centre. The transfer price for the
subassembly has been set at the longrun average market price. Assume that Division As maximum capacity for this
product is units per month and sales to the intermediate market are now units. The data available for each
division are in the accompanying table.
Click the icon to view the division data.
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