Question
Dockside Enterprises, Inc., operates two divisions: (1) a management division that owns and manages bulk carriers on the Great Lakes and (2) a repair division
Dockside Enterprises, Inc., operates two divisions: (1) a management division that owns and manages bulk carriers on the Great Lakes and (2) a repair division that operates a dry dock in Tampa, Florida. The repair division works on company ships, as well as other large-hull ships. The repair division has an estimated variable cost of $34 per labor-hour. The repair division has a backlog of work for outside ships. They charge $76 per hour for labor, which is standard for this type of work. The management division complained that it could hire its own repair workers for $44 per hour, including leasing an adequate work area.
What is the minimum transfer price per hour that the repair division should obtain for its services, assuming it is operating at capacity?
$42.
$34.
$44.
$76.
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