Suppose that the fabric plant is set up as a profit center. Bolts of Fabric FB70 sell
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Suppose that the fabric plant is set up as a profit center. Bolts of Fabric FB70 sell for
$400 (or can be bought for $400 from outside suppliers). The fabric plant and the fur¬
niture plant both have excess capacity. Assume that Job A500 is a special order. The fabric and furniture plants have sufficient excess capacity to satisfy the demands of Job A500. What is the minimum transfer price for a bolt of FB70? If the maximum transfer price is $400, by how much do the fabric plant's profits increase if the two profit cen¬
ters negotiate a transfer price that splits the joint benefit?
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Related Book For
Cost Management Accounting And Control
ISBN: 9780324002324
3rd Edition
Authors: Don R. Hansen, Maryanne M. Mowen
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