Suppose Division B could use the excess capacity to produce and sell externally 19,000 units of a new product at a price of $7.72 per unit. The variable cost for this new product is $6.08 per unit. What should be the minimum transfer price accepted by Division B for the 10,500 lamps and the maximum transfer price paid by Division A?
Suppose Division B could use the excess capacity to produce and sell externally 19,000 units of a new product at a price of $7.72 per unit. The variable cost for this new product is $6.08 per unit. What should be the minimum transfer price accepted by Division B for the 10,500 lamps and the maximum transfer price paid by Division A?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Suppose Division B could use the excess
capacity to produce and sell externally
19,000 units of a new product at a price of
$7.72 per unit. The variable cost for this
new product is $6.08 per unit. What should
be the minimum transfer price accepted by
Division B for the 10,500 lamps and the
maximum transfer price paid by Division A?
(Round answers to 2 decimal places, e.g.
10.50.)
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