Division A makes a part with the following characteristics: **SEE IMAGE TO SEE DETAILS** a} Division B, another division of the same company, would like to purchase 5,000 units of the part each period from Division A. Division A is currently selling 15,000 units to its outside customers. What should be the lowest acceptable transfer price from the perspective of Division A? b] Refer back to your answer in the last problem. Division B is now purchasing these parts from an outside supplier at a price of $24 each. If Division B begins to purchase the 5,000 parts from Division A rather than the outside supplier, what is the company as a whole change in net income? c) Division B, another division of the same company, would like to purchase 5,000 units of the part each period from Division A. Division A is currently selling 15,000 units to its outside customers. IF the transfer is made,
Division A makes a part with the following characteristics:
**SEE IMAGE TO SEE DETAILS**
a} Division B, another division of the same company, would like to purchase 5,000 units of the part each period from Division A. Division A is currently selling 15,000 units to its outside customers. What should be the lowest acceptable transfer price from the perspective of Division A?
b] Refer back to your answer in the last problem. Division B is now purchasing these parts from an outside supplier at a price of $24 each. If Division B begins to purchase the 5,000 parts from Division A rather than the outside supplier, what is the company as a whole change in net income?
c) Division B, another division of the same company, would like to purchase 5,000 units of the part each period from Division A. Division A is currently selling 15,000 units to its outside customers. IF the transfer is made, variable costs will decrease by $2 per unit. What should be the lowest acceptable transfer price from the perspective of Division A?
Step by step
Solved in 2 steps
