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Note: Wagons have FOUR wheels. (In contrast to one brownie per sundae.) Wagonco has two divisions: Wheels and Wagons. Each wagon needs four wheels. Fixed

Note: Wagons have FOUR wheels. (In contrast to one brownie per sundae.)

Wagonco has two divisions: Wheels and Wagons. Each wagon needs four wheels. Fixed costs = 0.

Wheels

Wagons

Sales/Market Price

$5 per wheel

$50 per wagon

VC

$3 per wheel

$22.50 per wagon, not including the cost of wheels (four wheels per wagon)

Items sold to outside market

2,250 wheels per month

800 per month

Capacity

5,000 wheels per month

  1. per month

What range of transfer prices would instill goal congruence? Prove using CFISes.

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