Question: yse it answred before but its wrong For question 7 there are 4 multible choices : a)7,300 increase b)7,000 increase c)300 increase d)no effect Use
Use the following information for the next 2 questions (6 & 7). Division A has a capacity of 2,000 units. Its sales and cost data are: Selling price per unit $100 Variable manufacturing costs per unit $25 Variable administrative costs per unit $5 Total fixed manufacturing overhead $20,000 Total fixed administrative costs $5,000 Division A is currently selling 1,900 units to outside customers, and Division B wants to purchase 300 units from A. If the transaction takes place, the variable administrative costs per unit on the units transferred to B will be $2/unit, not $5/unit 6. What should be the optimum transfer price (the lowest acceptable transfer price by Division A)? 7. If Division B is currently buying from an outside supplier at $98 per unit, what will be the effect on overall company profits if internal sales take place at the optimum transfer price
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