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Marigold Corporation manufactures car stereos. It is a division of Berna Motors, which manufactures vehicles. Marigold sells car stereos to Berna, as well as to
Marigold Corporation manufactures car stereos. It is a division of Berna Motors, which manufactures vehicles. Marigold sells car stereos to Berna, as well as to other vehicle manufacturers and retail stores. The following information is available for Marigold's standard unit: unit variable cost $37, unit fixed cost $23, and unit selling price to outside customer $86. Berna currently purchases a standard unit from an outside supplier for $81. Because of quality concerns and to ensure a reliable supply, the top management of Berna has ordered Marigold to provide 188,000 units per year at a transfer price of $32 per unit. Marigold is already operating at full capacity. Marigold can avoid $3 per unit of variable selling costs by selling the unit internally. Answer each of the following questions. (a) What is the minimum transfer price that Marigold should accept? Minimum transfer price $ Marigold Corporation manufactures car stereos. It is a division of Berna Motors, which manufactures vehicles. Marigold sells car stereos to Berna, as well as to other vehicle manufacturers and retail stores. The following information is available for Marigold's standard unit: unit variable cost $37, unit fixed cost $23, and unit selling price to outside customer $86. Berna currently purchases a standard unit from an outside supplier for $81. Because of quality concerns and to ensure a reliable supply, the top management of Berna has ordered Marigold to provide 188,000 units per year at a transfer price of $32 per unit. Marigold is already operating at full capacity. Marigold can avoid $3 per unit of variable selling costs by selling the unit internally. Answer each of the following questions. (a) What is the minimum transfer price that Marigold should accept? Minimum transfer price $
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