The CEO was thinking that if the Filter Manufacturing Department could supply the filters at a lower price than the Dust Collection System Department is currently paying to outside suppliers, then they would arrange an internal transfer between departments rather than giving the business to an external company. Should the Filter Manufacturing Department supply the filters to the Dust Collection System Department?

Market selling price of filters.	$22.00
Variable manufacturing costs per filter…	$12.00
Variable marketing and administrative costs per filter	$3.00
Fixed manufacturing costs	$2,000,000
Fixed marketing and administrative costs	$1,000,000
Capacity	3,000,000 filters
Current sales volume	3,000,000 filters

Answer rating: 100% (QA)

ANSWER Yes the Filter Manufacturing Department should s... View the full answer