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For the remaining questions, consider the following hypothetical information:KFC franchises purchase most of their spice packages from the KFC Corporate Spice Division. The Spice Division's
For the remaining questions, consider the following hypothetical information:KFC franchises purchase most of their spice packages from the KFC Corporate Spice Division. The Spice Division's incremental cost for manufacturing the packages is S90 per unit and it is currently working at 80% of capacity. "Hoe current market price of the packages is SI25 per unit (in addition to selling packages to KFC franchises. KFC Corporate Spice Division sells the packages to grocery stores under a different label). 7. Using the general guideline presented in the chapter, what is the minimum price at which the Spice division would sell packages to a KFC franchise? H. Suppose that KFC Corporation currently requires that whenever divisions with unused capacity sell products internally, they must do so at the incremental cost. Corporate is now considering having the KFC franchise and KFC Spice Division negotiate a transfer price. What is the range of possible transfer prices? What hybrid transfer price would "split the difference"? Would a negotiated transfer price improve KFC Corporate's ability to evaluate the Spice Division performance? explain. Would a negotiated transfer price improve the Spice Division manager's motivation
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