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Assume that Division A has a product that can be sold either to Division B of the same company or to outside customers. The managers
Assume that Division A has a product that can be sold either to Division B of the same company or to outside customers. The managers of both divisions are evaluated based on their own division's return on investment ROI The managers are free to decide if they will participate in any internal transfers. All transfer prices are negotiated. Division A: Capacity in units Number of units now being sold to outside customers Selling price per unit on the outside market $ Variable costs per unit $ Fixed costs per unit based on capacity Division B: Number of units needed annually Purchase price now being paid to an outside supplier $ Assume that Division A can avoid $ per unit in variable costs on any sales to Division B Which one of the following statements is most correct regarding the division managers' response to the opportunity for the internal transfer? the managers will not agree to a transfer the managers will agree to a transfer at a price between $ and $ the managers will agree to a transfer at a price between $ and $ the managers will agree to a transfer at a price between $ and $ the managers will agree to a transfer at a price between $ and $
Assume that Division A has a product that can be sold either to Division B of the same company or to outside customers. The managers of both divisions are evaluated based on their own division's return on investment ROI The managers are free to decide if they will participate in any internal transfers. All transfer prices are negotiated.
Division A:
Capacity in units
Number of units now being sold to outside customers
Selling price per unit on the outside market $
Variable costs per unit $
Fixed costs per unit based on capacity
Division B:
Number of units needed annually
Purchase price now being paid to an outside supplier $
Assume that Division A can avoid $ per unit in variable costs on any sales to Division B Which one of the following statements is most correct regarding the division managers' response to the opportunity for the internal transfer?
the managers will not agree to a transfer
the managers will agree to a transfer at a price between $ and $
the managers will agree to a transfer at a price between $ and $
the managers will agree to a transfer at a price between $ and $
the managers will agree to a transfer at a price between $ and $
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