Answered step by step
Verified Expert Solution
Question
...
1 Approved Answer
ABC Company Division 1 manufactures and sells wheels which can be sold to external customers or transferred to Division 2. The following data is available
ABC Company Division 1 manufactures and sells wheels which can be sold to external customers or transferred to Division 2. The following data is available from last month: o o Division 1 Selling price to customers external ................................... $ 50 / unit Variable cost for sales to customers external ..... $ 35 / unit o o o Capacity................................................. ................. ............. 15,000 units Division 2 Number of wheels needed per month .................... 5 000 units Price per wheel paid to a supplier external ........... $ 47 / unit If Division 1 sells the wheels to Division 2, Division 1 can avoid $ 2 per unit of sales commissions. Assume that Division 1 sells 7,500 units per month to external customers. What is the lowest acceptable transfer price from a selling division's perspective if division 2 requires 5,000 units per month from division 1? $ 47 per unit $ 50 per unit $ 35 per unit 33 unit What is the maximum price per wheel that Division 2 should be willing to pay to Division 1 if a transfer were to take place? Options for question 23: $ 35 per unit $ 33 per unit 47 50 Assume that Division 1 sells 11,500 units each month to external customers. What is the lowest acceptable transfer price from a selling division's perspective if division 2 requires 5,000 units per month from division 1. $ 34.73 per unit $ 37.50 per unit $ 47 per unit 37.50
Step by Step Solution
There are 3 Steps involved in it
Step: 1
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-text-image.webp)
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Step: 3
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started