Swifty Corporation manufactures and sells high-priced motorcycles. The Engine Division produces and sells engines to other motorcycle companies and internally to its Production Division. It has been decided that the Engine Division will sell 30000 units to the Production Division at $1050 a unit. The Engine Division, currently operating at fall capacity, has a unit selling price of $3550 and unit variable costs and unit fixed costs of $1050 and $700, respectively. The Production Division is currently paying $3300 per unit to an outside supplier. Of this amount, $120 per unit can be saved on internal sales from reduced selling expenses. What is the minimum transfer price that the Engine Division should accept? ○ $2500 $3430 ○ $3550 O $3300
Swifty Corporation manufactures and sells high-priced motorcycles. The Engine Division produces and sells engines to other motorcycle companies and internally to its Production Division. It has been decided that the Engine Division will sell 30000 units to the Production Division at $1050 a unit. The Engine Division, currently operating at fall capacity, has a unit selling price of $3550 and unit variable costs and unit fixed costs of $1050 and $700, respectively. The Production Division is currently paying $3300 per unit to an outside supplier. Of this amount, $120 per unit can be saved on internal sales from reduced selling expenses. What is the minimum transfer price that the Engine Division should accept? ○ $2500 $3430 ○ $3550 O $3300
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:Swifty Corporation manufactures and sells high-priced motorcycles. The Engine Division produces and sells
engines to other motorcycle companies and internally to its Production Division. It has been decided that the
Engine Division will sell 30000 units to the Production Division at $1050 a unit. The Engine Division, currently
operating at fall capacity, has a unit selling price of $3550 and unit variable costs and unit fixed costs of $1050 and
$700, respectively. The Production Division is currently paying $3300 per unit to an outside supplier. Of this
amount, $120 per unit can be saved on internal sales from reduced selling expenses.
What is the minimum transfer price that the Engine Division should accept?
○ $2500
$3430
○ $3550
O $3300
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