Godina Products, Inc., has a Receiver Division that manufactures and sells a number of products, including a standard receiver that could be used by another division in the company, the Industrial Products Division, in one of its products. Data concerning that receiver appear below: Capacity in units 58,000Selling price to outside customers$89Variable cost per unit$35Fixed cost per unit (based on capacity)$42?The Industrial Products Division is currently purchasing 10,000 of these receivers per year from an overseas supplier at a cost of $81 per receiver.?Assume that the Receiver Division is selling all of the receivers it can produce to outside customers. Does there exist a transfer price that would make both the Receiver and Industrial Products Division financially better off
than if the Industrial Products Division were to continue buying its receivers from the outside supplier?
A. Yes, both divisions are always better off regardless of whether the selling division has enough idle capacity to handle all of the buying division's needs.
B. Yes, the minimum transfer price that the selling division should be willing to accept is less than the maximum transfer price that the buying division should be willing to accept.
C. No, the minimum transfer price that the selling division should be willing to accept exceeds the maximum transfer price that the buying division should be willing to accept.
D. The answer cannot be determined from the information that has been provided.
Answer: C
You might also like to view...
A fully developed mini version of a report designed for the reader who lacks the time to read the entire document is called what?
A) Abstract B) Synopsis C) Appendix D) Table of contents E) Executive summary
A company that uses LIFO will find that its ______________________________ account will be somewhat out of date
Fill in the blank(s) with correct word
Whether the seller is a merchant or a nonmerchant and if no shipment or delivery is required by the seller, risk of loss passes when the buyer actually takes possession of the goods
Indicate whether the statement is true or false
Fraud has occurred online only by e-mail.
Answer the following statement true (T) or false (F)