Dok int int rences The Molding Division of Cotwold Company manufactures a plastic casing used by the Assembly Division. This casing is also sold to external customers for $32 per unit. Variable costs for the casing are $19 per unit, and fixed cost is $4 per unit. Cotwold executives would like for the Molding Division to transfer 15,000 units to the Assembly Division at a price of $24 per unit. Assume that the Molding Division has enough excess capacity to accommodate the request. Required: 1. Should the Molding Division accept the $24 transfer price proposed by management? 2. Calculate the effect on the Molding Division's net income if it accepts the $24 transfer price. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Should the Molding Division accept the $24 transfer price proposed by management? Should the Molding Division accept the $24 transfer price proposed by management? Required 2 > Yes
Dok int int rences The Molding Division of Cotwold Company manufactures a plastic casing used by the Assembly Division. This casing is also sold to external customers for $32 per unit. Variable costs for the casing are $19 per unit, and fixed cost is $4 per unit. Cotwold executives would like for the Molding Division to transfer 15,000 units to the Assembly Division at a price of $24 per unit. Assume that the Molding Division has enough excess capacity to accommodate the request. Required: 1. Should the Molding Division accept the $24 transfer price proposed by management? 2. Calculate the effect on the Molding Division's net income if it accepts the $24 transfer price. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Should the Molding Division accept the $24 transfer price proposed by management? Should the Molding Division accept the $24 transfer price proposed by management? Required 2 > Yes
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:bok
int
int
rences
The Molding Division of Cotwold Company manufactures a plastic casing used by the Assembly Division. This casing is also sold to
external customers for $32 per unit. Variable costs for the casing are $19 per unit, and fixed cost is $4 per unit. Cotwold executives
would like for the Molding Division to transfer 15,000 units to the Assembly Division at a price of $24 per unit. Assume that the Molding
Division has enough excess capacity to accommodate the request.
Required:
1. Should the Molding Division accept the $24 transfer price proposed by management?
2. Calculate the effect on the Molding Division's net income if it accepts the $24 transfer price.
Complete this question by entering your answers in the tabs below.
Required 1 Required 2
Should the Molding Division accept the $24 transfer price proposed by management?
Should the Molding Division accept the $24 transfer price proposed by management?
BINT
Required 2 >
Yes
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