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Flowers and Flowers, Inc., has two divisions. Division A has an investment base of $1,150,000 and produces (and sells) 161,000 units of Eyne at a
Flowers and Flowers, Inc., has two divisions. Division A has an investment base of $1,150,000 and produces (and sells) 161,000 units of Eyne at a market price of $20.00 per unit. Variable costs total $6.00 per unit, and fixed charges are $5.00 per unit (based on a capacity of 199,250 units). Division B wants to purchase 45,000 units of Eyne from Division A. However, Division B is only willing to pay $13.00 per unit. What is the contribution margin for Division A if it transfers 45,000 units to Division B at $13.00 per unit?
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