Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Dock Industries is a decentralized company that evaluates its divisions based on ROI. The Wilson Division has the capacity to produce 2,000 units of a
Dock Industries is a decentralized company that evaluates its divisions based on ROI. The Wilson Division has the capacity to produce 2,000 units of a component. The Wilson Division's variable costs are $85 per unit; fixed costs are $70 per unit. The Becker Division can use the product as a component in one of its products. The Becker Division would incur $65 of variable costs to convert the component into its own product which sells for $310. Required (consider each question independent of each other): a. Assume the Wilson Division can sell all that it produces for $185 each. The Becker Division needs 100 units. What is the appropriate transfer price? b. Assume the Wilson Division can sell 1,800 units at $265. Any excess capacity will be unused unless the units are purchased by the Becker Division (which can use up to 100 units). What are the minimum and maximum transfer prices
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started