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Doodles Wine, Inc., has a Bottle Division that manufactures and sells a number of bottles, including a bottle that could be used by another division
Doodles Wine, Inc., has a Bottle Division that manufactures and sells a number of bottles, including a bottle that could be used by another division in the company, the Wine Processing Division. Data concerning that bottle appear below: Parts Division 500,000 Capacity in Units Selling Price to outside customers $2.80 Variable cost per unit $1.80 Fixed cost per unit (based on capacity) $0.20 The Wine Processing Division is currently purchasing 300,000 of these bottles per year from an outside supplier at a cost of $2.75 per bottle. Currently the Bottle division is only producing and selling 320,000 bottles a year. There is no savings in selling within the company. Assuming this is an all-or none order, what should be the minimum acceptable transfer price (per unit) for the bottles from the standpoint of the Bottles Division
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