The Bathtub Division of Pronghorn 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 5,200 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 $164. If sold externally, the estimated unit variable cost would be $148. However, by selling internally, the Faucet Division would save $7 per unit on variable selling expenses. The Faucet Division is currently operating at full capacity. Its standard unit sells for $52 per unit and has variable costs of $35. Compute the minimum transfer price that the Faucet Division should be willing to accept. Minimum transfer price $ Should they accept this offer? They ◆ this offer.

The Bathtub Division of Pronghorn 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 5,200 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 $164. If sold externally, the estimated unit variable cost would be $148. However, by selling internally, the Faucet Division would save $7 per unit on variable selling expenses. The Faucet Division is currently operating at full capacity. Its standard unit sells for $52 per unit and has variable costs of $35. Compute the minimum transfer price that the Faucet Division should be willing to accept. Minimum transfer price $ Should they accept this offer? They ◆ this offer.

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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