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Marigold's tire division typically sold all of its output to the assembly division for use in its tricycle products. The market for tires was booming
Marigold's tire division typically sold all of its output to the assembly division for use in its tricycle products. The market for tires was booming though, allowing the tire division to sell its cutput externally for $5.hire. The assembly division would prefer to use tires produced in house, but if it needs to purchase elsewhere, it can also purchase them for $5/ tire. The tires have a variable cost of $2/tire to manufacture, or $3 / tire if all absorption costs are considered. Current capacity is 4,300 tires, and the tricycle division needs 4,300 tires, How much gross margin will the tire division make by selling all of its output to the assembly divisien if (a) variable cost is used as the transfer price, (b) absorption cost is used as the transfer price, or (c) market price is used as the transfer price? (Enter loss using elther a nejotive sign preceding the number es -45 or parenthesei es. (45). Do not ieove smy anower fetd blank, Enter Ofor amounts)
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