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Federated Manufacturing Inc. (FMI) produces electronic components in three divisions: industrial, commercial, and consumer products. The commercial products division annually purchases 10,200 units of part
Federated Manufacturing Inc. (FMI) produces electronic components in three divisions: industrial, commercial, and consumer products. The commercial products division annually purchases 10,200 units of part 23-6711, which the industrial division produces for use in manufacturing one of its own products. The commercial division is growing rapidly. The commercial division is expanding its production and now wants to increase its purchases of part 23-6711 to 15.200 units per year. The problem is that the industrial division is at full capacity. No new investment in the industrial division has been made for some years because top management sees little future growth in its products, so its capacity is unlikely to increase soon The commercial division can buy part 23-6711 from Advanced Micro Inc. or from Admiral Electric, a customer of the industrial division now purchasing 660 units of part 88-461. The industrial division's sales to Admiral would not be affected by the commercial division's decision regarding part 23-6711. $ 189 156 287 Industrial Division: Data on part 23-6711: Price to commercial division Variable manufacturing costs Price to outside buyers Data on part 88-461: Variable manufacturing costs Sales price Other Suppliers of Part 23-6711: Advance Micro Inc., price Admiral Electric, price $ 65 95 $ 202 212 2. Assume that the industrial division's sales to Admiral will be canceled if the commercial division does not buy from Admiral. What would be the unit cost to FMI in this case, and would the desired transfer price change? Assume that the industrial division's sales to Admiral will be canceled if the commercial division does not buy from Admiral. What would be the unit cost to FMI in this case, and would the desired transfer price change? (Round your answer to 2 decimal places.) per unit Unit cost to FMI Transfer price change INo
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