The Bathtub Division of Flint Plumbing Corporation has recently approached the Faucet Division with a proposal. The Bathtub Division would like to make a special "ivory" tub with gold-plated fixtures for the company's 50-year anniversary. It would make only 5,900 of these units. It would like the Faucet Division to make the fixtures and provide them to the Bathtub Division at a transfer price of $185. If sold externally, the estimated unit variable cost would be $169. However, by selling internally, the Faucet Division would save $9 per unit on variable selling expenses. The Faucet Division is currently operating at full capacity. Its standard unit sells for $59 per unit and has variable costs of $42. Compute the minimum transfer price that the Faucet Division should be willing to accept. Minimum transfer price $ Should they accept this offer?

The Bathtub Division of Flint Plumbing Corporation has recently approached the Faucet Division with a proposal. The Bathtub Division would like to make a special "ivory" tub with gold-plated fixtures for the company's 50-year anniversary. It would make only 5,900 of these units. It would like the Faucet Division to make the fixtures and provide them to the Bathtub Division at a transfer price of $185. If sold externally, the estimated unit variable cost would be $169. However, by selling internally, the Faucet Division would save $9 per unit on variable selling expenses. The Faucet Division is currently operating at full capacity. Its standard unit sells for $59 per unit and has variable costs of $42. Compute the minimum transfer price that the Faucet Division should be willing to accept. Minimum transfer price $ Should they accept this offer?

Essentials of Business Analytics (MindTap Course List)

2nd Edition

ISBN:9781305627734

Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Publisher:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Chapter15: Decision Analysis

Section: Chapter Questions

Problem 5P: Hudson Corporation is considering three options for managing its data warehouse: continuing with its...

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