Question: Trying to find minimum transfer price accepted by Div B Ayayai Inc. has two divisions. Division A makes and sells student desks. Division B manufactures

Trying to find minimum transfer price accepted by Div B
Ayayai Inc. has two divisions. Division A makes and sells student desks. Division B manufactures and sells reading lamps. Each desk has a reading lamp as one of its components. Division A can purchase reading lamps at a cost of $10 from an outside vendor. Division A needs 12,400 lamps for the coming year. Division B has the capacity to manufacture 62,000 lamps annually. Sales to outside customers are estimated at 49,600 lamps for the next year. Reading lamps are sold at $12 each. Variable costs are $7 per lamp and include $3 of variable sales costs that are not incurred if lamps are sold internally to Division A. The total amount of fixed costs for Division B is $99,200. Consider the following independent situations. - Your answer is partially correct. If Division A needs 15,500 lamps instead of 12,400 during the next year, what should be the minimum transfer price accepted by Division B and the maximum transfer price paid by Division A? (Round answers to 2 decimal places, e.g. 10.50.) Minimum transfer price accepted by Division B $ per unit Maximum transfer price paid by Division A $ per unit
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
