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Martin Company currently manufactures all component parts used in the manufacturing of various hand tools. The Extruding Division produces a steel handle used in three
Martin Company currently manufactures all component parts used in the manufacturing of various hand tools. The Extruding Division produces a steel handle used in three different tools. The budget for these handles is 123,000 units with the following unit cost: The Polishing Division purchases 23,000 handles from the Extruding Division and completes the hand tools. An outside supplier, Venture Steel, has offered to supply 23,000 units of the handle to the Polishing Division for $1.49 per unit. The Extruding Division currently has idle capacity that cannot be used. If Martin Company would like to develop a range of transfer prices, what would be the maximum transfer price that the Polishing Division would be willing to pay the Extruding Division? Multiple Cholce $1.09. Multiple Choice $1.09 $1.28. $1.51. $1.49. You have been provided with the following information for Division X of a decentralized company: Division Y of the same company would like to purchase all of its units internally. Division Y needs 6,900 units each period and currently pays $89 per unit to an outside firm. What is the lowest price that Division X could accept from Division Y ? (Assume that Division Y wants to use a sole supplier and will not purchase less than 6,900 from a supplier.) Multiple Choice $85. $95 Multiple Choice $85. $95. $89. $65
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