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Grouper Ltd., has two divisions: a Parts Division and a Products Division. Each division operates as a profit centre. The Parts Division manufactures keyboards and
Grouper Ltd., has two divisions: a Parts Division and a Products Division. Each division operates as a profit centre. The Parts Division manufactures keyboards and is free to sell its product internally and externally. The Parts Division's annual capacity is 31,900 units and its fixed cost is $478,500. Currently, external sales represent 70% of the Parts Division's production capacity. The selling price for a keyboard is $60, and the variable cost is 60% of the sale. The Products Division is developing a new specialty keyboards. Mr. Allain, the manager of the Products Division, has obtained three quotes from external suppliers, $75, $83, and $87. He also asked the Parts Division to provide a quote for 5,380 units. To take the specialty keyboard order, the Parts Division needs to invest in a stamping machine, costing $25,520. In addition, the specialty keyboard will incur additional $15 of variable cost for new features; however, it will reduce the regular variable cost by $3 of commission cost due to internal transfer. It takes 2 regular keyboards to make 1 specialty keyboard. If the two divisions agree to split the difference between the market price and the cost, what price should they agree on? (Round answers to 2 decimal places, e.g. 125.64. Enter o if there is no transfer price.) x Price
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