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Collyer Products Inc. has a Valve Division that manufactures and sells a standard valve as follows: Capacity in units Selling price to outside customers
Collyer Products Inc. has a Valve Division that manufactures and sells a standard valve as follows: Capacity in units Selling price to outside customers on the intermediate market Variable costs per unit 120,000 Fixed costs per unit (based on capacity) The company has a Pump Division that could use this valve in the manufacture of one of its pumps. The Pump Division is currently purchasing 12.000 valves per year from an overseas supplier at a cost of $17 per valve. Required: 1. Assume that the Valve Division has ample idle capacity to handle all of the Pump Division's needs. What is the acceptable range. if any, for the transfer price between the two divisions? Transfer price
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