Question
Orange Inc. is a division of Fruits Inc. Orange Inc produces juice and sells it to a number of companies, as well as to Fruits
Orange Inc. is a division of Fruits Inc. Orange Inc produces juice and sells it to a number of companies, as well as to Fruits Inc. who uses it for their division. Recently, the VP of marketing for Fruits Inc approached Orange Inc with a request to make 20 000 units of special juice. The following info is available regarding the Orange Inc. Selling price of regular juice per unit -> 80$ Variable cost of regular juice per unit -> 45$ Additional variable cost of special juice per unit -> 25$ The fruits inc can purchase the special juice from an outside source for $75 per unit, plus shipping. The shipping equals $2 per unit.
A) calculate the transfer price for each following situations 1. Orange inc has available capacity 2. Has no available capacity and would have to forego sales of 20k units to existing customers to meet this request 3. no available capacity and would have to forego sales of 30k units to exisitng customers to meet this rqeuest.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started