Dake Bakery is purchasing heavy cream from an outside suppliers. The comapny's dairy division, which has no excess capacity, makes and sells heavy cream at a variable cost of $32 per gallon and a selling price of $59 per gallon. If the dairy division begins sales to the bakery, it willl use the general transfer pricing rule and will be able to reduce vvariable cost on internal transfer by $5 per gallon. How much is the minimum transfer price per gallon that the dairy division should establish?
Dake Bakery is purchasing heavy cream from an outside suppliers. The comapny's dairy division, which has no excess capacity, makes and sells heavy cream at a variable cost of $32 per gallon and a selling price of $59 per gallon. If the dairy division begins sales to the bakery, it willl use the general transfer pricing rule and will be able to reduce vvariable cost on internal transfer by $5 per gallon. How much is the minimum transfer price per gallon that the dairy division should establish?
Chapter10: Short-term Decision Making
Section: Chapter Questions
Problem 6MC: Jansen Crafters has the capacity to produce 50,000 oak shelves per year and is currently selling...
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Dake Bakery is purchasing heavy cream from an outside suppliers. The comapny's dairy division, which has no excess capacity, makes and sells heavy cream at a variable cost of $32 per gallon and a selling price of $59 per gallon. If the dairy division begins sales to the bakery, it willl use the general transfer pricing rule and will be able to reduce vvariable cost on internal transfer by $5 per gallon. How much is the minimum transfer price per gallon that the dairy division should establish?
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