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Starcic Products, Incorporated, has a Connector Division that manufactures and sells a number of products, including a standard connector. Data concerning that connector appear below: Capacity in units. Selling price to outside customers Variable cost per unit Fixed cost per unit (based on capacity) 46,000 $ 96.00 $ 62.00 $15.00 The company has a Transmission Division that needs 7,000 special heavy-duty connectors per year. The Connector Division's variable cost to manufacture and ship this special connector would be $67.00 per unit. Making these special connectors would require more manufacturing resources. Therefore, the Connector Division would have to reduce its production and sales of regular connectors to outside customers from 46,000 units per year to 38,900 units per year. Required: As far as the Connector Division is concerned, what is the lowest acceptable transfer price for the special connectors? Note: Round your answer to 2 decimal places. Lowest acceptable transfer price

Starcic Products, Incorporated, has a Connector Division that manufactures and sells a number of products, including a standard connector. Data concerning that connector appear below: Capacity in units. Selling price to outside customers Variable cost per unit Fixed cost per unit (based on capacity) 46,000 $ 96.00 $ 62.00 $15.00 The company has a Transmission Division that needs 7,000 special heavy-duty connectors per year. The Connector Division's variable cost to manufacture and ship this special connector would be $67.00 per unit. Making these special connectors would require more manufacturing resources. Therefore, the Connector Division would have to reduce its production and sales of regular connectors to outside customers from 46,000 units per year to 38,900 units per year. Required: As far as the Connector Division is concerned, what is the lowest acceptable transfer price for the special connectors? Note: Round your answer to 2 decimal places. Lowest acceptable transfer price

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Starcic Products, Incorporated, has a Connector Division that manufactures and sells a number of products, including a standard connector. Data concerning that connector appear below: Capacity in units Selling price to outside customers Variable cost per unit Fixed cost per unit (based on capacity) 46,000 $ 96.00 $ 62.00 $15.00 The company has a Transmission Division that needs 7,000 special heavy-duty connectors per year. The Connector Division's variable cost to manufacture and ship this special connector would be $67.00 per unit. Making these special connectors would require more manufacturing resources. Therefore, the Connector Division would have to reduce its production and sales of regular connectors to outside customers from 46,000 units per year to 38,900 units per year. Required: As far as the Connector Division is concerned, what is the lowest acceptable transfer price for the special connectors? Note: Round your answer to 2 decimal places. Lowest acceptable transfer price
Transcribed Image Text:Starcic Products, Incorporated, has a Connector Division that manufactures and sells a number of products, including a standard connector. Data concerning that connector appear below: Capacity in units Selling price to outside customers Variable cost per unit Fixed cost per unit (based on capacity) 46,000 $ 96.00 $ 62.00 $15.00 The company has a Transmission Division that needs 7,000 special heavy-duty connectors per year. The Connector Division's variable cost to manufacture and ship this special connector would be $67.00 per unit. Making these special connectors would require more manufacturing resources. Therefore, the Connector Division would have to reduce its production and sales of regular connectors to outside customers from 46,000 units per year to 38,900 units per year. Required: As far as the Connector Division is concerned, what is the lowest acceptable transfer price for the special connectors? Note: Round your answer to 2 decimal places. Lowest acceptable transfer price
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