Crede Inc. has two divisions. Division A makes and sells student desks. Division B manufactures and sells reading lamps. Each desk has a reading lamp as one of its components. Division A can purchase reading lamps at a cost of $ 10.35 from an outside vendor. Division A needs 10,100 lamps for the coming year. Division B has the capacity to manufacture 50,400 lamps annually. Sales to outside customers are estimated at 40,300 lamps for the next year. Reading lamps are sold at $ 11.50 each. Variable costs are $ 6.73 per lamp and include $ 1.01 of variable sales costs that are not incurred if lamps are sold internally to Division A. The total amount of fixed costs for Division B is $ 77,000 . Consider the following independent situations.

Crede Inc. has two divisions. Division A makes and sells student desks. Division B manufactures and sells reading lamps. Each desk has a reading lamp as one of its components. Division A can purchase reading lamps at a cost of $ 10.35 from an outside vendor. Division A needs 10,100 lamps for the coming year Division B has the capacity to manufacture 50,400 lamps annually. Sales to outside customers are estimated at 40,300 lamps for the next year. Reading lamps are sold at s 11.50 each. Variable costs are $ 6.73 per lamp and include 1.01 of variable sales costs that are not incurred if lamps are sold internally to Division A. The total amount of fixed costs for Division B is $77,000 Consider the following independent situations for oivision 8 1ss 7,.005Va csts are s (a) Your answer is correct. What should be the minimum transfer price accepted by Division B for the 10,100 lamps and the maximum transfer price paid by Division A? (Round answers to 2 decimal places, e.g. 10.50.) Minimum transfer price accepted by Division B 5.72 per unit Maximum transfer price paid by Division A 10.35 per unit SHOW SOLUTIONSHOW ANSWER ANSWER LINK TO TEXT VIDEO: SIMILAR EXERCISE Attempts: 1 of 3 used (b) Suppose Division B could use the excess capacity to produce and sell externally 20,800 units of a new product at a price of $7.33 per unit. The variable cost for this new product is $ 6.37 per unit. What should be the minimum transfer price accepted by Division B for the 10,100 lamps and the maximum transfer price paid by Division A? (Round answers to 2 decimal places, e.g. 10.50.) Minimum transfer price accepted by Division Bs per unit Maximum transfer price paid by Division A per unit