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Oriole Company is a multidivisional company. Its managers have full responsibility for profits and complete autonomy to accept or reject transfers from other divisions. Division
Oriole Company is a multidivisional company. Its managers have full responsibility for profits and complete autonomy to accept or reject transfers from other divisions. Division A produces a subassembly part for which there is a competitive market. Division B currently uses this subassembly for a final product that is sold outside at $2,450. Division A charges Division B market price for the part, which is $1,520 per unit. Variable costs are $1,060 and $1,170 for Divisions A and B, respectively. The manager of Division B feels that Division A should transfer the part at a lower price than market because at market, Division B is unable to make a profit. Calculate Division B's contribution margin if transfers are made at the market price, and calculate the company's total contribution margin. (Enter negative amounts use either a negative sign preceding the number eg -45 or parentheses eg (45).) Division B's contribution margin Company's total contribution margin $ per unit per unit Assume that Division A can sell all its production in the open market. Should Division A transfer the goods to Division B? No eTextbook and Media Assume that Division A can sell in the open market only 510 units at $1,520 per unit out of the 1,020 units that it can produce every month. Assume also that a 10% reduction in price is necessary to sell all 1,020 units each month. Compute the contribution margins under following three different alternatives to support your decision. Calculate the Contribution Maring for Division A only. (Round intermediate calculations to 2 decimal places, e.g. 125.25 and final answers to 0 decimal places, e.g. 125.) Alternative 1: Alternative 2: Maintain price, no transfers Cut price, no transfers Assistance Used $ $ Alternative 3: Maintain price and transfers $ Should transfers be made? If so, how many units should the division transfer and at what price? (If no transfer is necessary input 0 units at $0.) The division should tansfer units at $
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