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Variable cost per unit cost per unit (based on capacit afety Products Division of Wige ucts, Incorporated needs 6,000 J-duty sensors per year. The Se nn'r uariahlo co to manufactu

Variable cost per unit cost per unit (based on capacit afety Products Division of Wige ucts, Incorporated needs 6,000 J-duty sensors per year. The Se nn'r uariahlo co to manufactu

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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Wigelsworth Products, Incorporated, has a Sensor Division that manufactures and sells a number of products, including a standard sensor. Data concerning that sensor appear below: Capacity in units 89,000 Selling price to outside customers $ 67 Variable cost per unit $ 30 Fixed cost per unit (based on capacity) $ 28 The Safety Products Division of Wigelsworth Products, Incorporated needs 6,000 special heavy-duty sensors per year. The Sensor Division's variable cost to manufacture and ship this special sensor would be $32 per unit. Because these special sensors require more manufacturing resources than the standard sensor, the Sensor Division would have to reduce its production and sales of standard sensors to outside customers from 89,000 units per year to 79,400 units per year. From the standpoint of the Sensor Division, what is the minimal acceptable transfer price for the special sensors for the Safety Products Division?
Transcribed Image Text:Wigelsworth Products, Incorporated, has a Sensor Division that manufactures and sells a number of products, including a standard sensor. Data concerning that sensor appear below: Capacity in units 89,000 Selling price to outside customers $ 67 Variable cost per unit $ 30 Fixed cost per unit (based on capacity) $ 28 The Safety Products Division of Wigelsworth Products, Incorporated needs 6,000 special heavy-duty sensors per year. The Sensor Division's variable cost to manufacture and ship this special sensor would be $32 per unit. Because these special sensors require more manufacturing resources than the standard sensor, the Sensor Division would have to reduce its production and sales of standard sensors to outside customers from 89,000 units per year to 79,400 units per year. From the standpoint of the Sensor Division, what is the minimal acceptable transfer price for the special sensors for the Safety Products Division?
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