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Laissez Faire has two divisions: the Cologne Division and the Bottle Division. The Bottle Division produces containers that can be used by the Cologne Division.
Laissez Faire has two divisions: the Cologne Division and the Bottle Division. The Bottle Division produces containers that can be used by the Cologne Division. The Bottle Division's variable manufacturing costs is S2 and the external sales price is S3. Cologne Division can purchase similar containers from an outside supplier for $2.60. Assume that the Bottle Division has sufficient capacity to meet all external demands in addition to the demands of the Cologne Division. Using the general rule, the minimum transfer price from Bottle to Cologne would be $2.00 $2.60 $3.00 a negotiated price between the divisions
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