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Division 1 of Ace Company makes and sells wheels that can either be sold to outside customers or sold to Division 2 of Ace Company.
Division 1 of Ace Company makes and sells wheels that can either be sold to outside customers or sold to Division 2 of Ace Company. The following data are available from last month: Division 1: Selling price per wheel to outside customers ........ $50 Variable cost per wheel when sold to outside customers......... $35 Capacity in wheels. 15,000 Division 2: Number of wheels needed per month 5,000 Price per wheel if purchased from an outside supplier........... $45 If Division 1 sells the wheels to Division 2, Division 1 can avoid $2 per wheel in sales commissions. 33. If you were President of Division 1, what is the least amount you would sell a wheel for to Division 2, and why. 34. If you were President of Division 2, what is the maximum amount you would pay Division 1 for a wheel and why
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