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$4 per unit. Cotwold executives would like for the Molding Division to transfer 14,000 units to the Assembly on at a price of $21 per unit. Assume that the Molding Division has enough excess capacity to accommodate quest. red: ould the Molding Division accept the $21 transfer price proposed by management?

$4 per unit. Cotwold executives would like for the Molding Division to transfer 14,000 units to the Assembly on at a price of $21 per unit. Assume that the Molding Division has enough excess capacity to accommodate quest. red: ould the Molding Division accept the $21 transfer price proposed by management?

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter17: Activity Resource Usage Model And Tactical Decision Making
Section: Chapter Questions
Problem 18E: A company is considering a special order for 1,000 units to be priced at 8.90 (the normal price...
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The Molding Division of Cotwold Company manufactures a plastic casing used by the Assembly Division. This casing is also sold to external customers for $31 per unit. Variable costs for the casing are $18 per unit, and fixed cost is $4 per unit. Cotwold executives would like for the Molding Division to transfer 14,000 units to the Assembly Division at a price of $21 per unit. Assume that the Molding Division has enough excess capacity to accommodate the request. Required: 1. Should the Molding Division accept the $21 transfer price proposed by management? 2. Calculate the effect on the Molding Division's net income if it accepts the $21 transfer price. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Net Income will increase by < Required 1 Required 2
Transcribed Image Text:The Molding Division of Cotwold Company manufactures a plastic casing used by the Assembly Division. This casing is also sold to external customers for $31 per unit. Variable costs for the casing are $18 per unit, and fixed cost is $4 per unit. Cotwold executives would like for the Molding Division to transfer 14,000 units to the Assembly Division at a price of $21 per unit. Assume that the Molding Division has enough excess capacity to accommodate the request. Required: 1. Should the Molding Division accept the $21 transfer price proposed by management? 2. Calculate the effect on the Molding Division's net income if it accepts the $21 transfer price. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Net Income will increase by < Required 1 Required 2
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