The Clocker Company Division T manufactures a stopwatch that it sells for $30 to outside customers. The
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Question:
The Clocker Company Division T manufactures a stopwatch that it sells for $30 to outside customers. The division has provided the following data on the stopwatch:
monthly capacity | 12,000 | timers | ||
Variable cost per unit | ps | 15 | by timer | |
Fixed cost per unit | ps | 10 | by timer | |
Clocker Company S Division currently purchases 5,000 similar timers each month from a foreign supplier for $27 each. S Division would like to purchase your timers from T Division if the price is right.
Assume Division T is operating at full capacity and is able to sell all of the timers it produces to outside customers at their usual selling price.
What is the lowest acceptable transfer price from the point of view of the selling division?
Related Book For
Managerial Accounting
ISBN: 9780073526706
12th Edition
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
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