What is the lowest price the F Division should charge for the internal transfers of its goods? 2.What is the highest price the G Division should charge for the internal transfers of its goods?
Division G has asked Division F of the same company to supply it with 5,000 units of part WD26 this year to use in one of its products. Division G has received a bid from an outside supplier for the parts at a price of $19.00 per unit. Division F has the capacity to produce 25,000 units of part WD26 per year. Division F expects to sell 21,000 units of part WD26 to outside customers this year at a price of $18.00 per unit. To fill the order from Division G, Division F would have to cut back its sales to outside customers. Division F produces part WD26 at a variable cost of $12.00 per unit. The cost of packing and shipping the parts for outside customers is $2.00 per unit. These packing and shipping costs would not have to be incurred on sales of the parts to Division G.
1.What is the lowest price the F Division should charge for the internal transfers of its goods?
2.What is the highest price the G Division should charge for the internal transfers of its goods?
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
