Moto Corporation manufactures and sells motor bikes. The Wheel & Frame Division creates parts that are both

Question:

Moto manufactures and sells motor bikes. The Wheel & Frame Division creates parts that are both sold externally and transferred internally to the Assembly Division for assembly. Wheel #606 sells externally for $48 and the variable cost to make it is $26. What would you recommend as the transfer price between Wheels & Frames and Assembly if there is a competitive external market for #606? Would your answer change if there were no external market for #606? Why? What would the transfer price be if upper management required cost plus 20 percent as the transfer price?
Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...