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Oriole Industries is a decentralized firm. It has two production centres: Vancouver and Kamloops. Each one is evaluated based on its return on investment. Vancouver
Oriole Industries is a decentralized firm. It has two production centres: Vancouver and Kamloops. Each one is evaluated based on its return on investment. Vancouver has the capacity to manufacture 150,000 units of component TR222. Vancouver's variable costs are $155 per unit. Kamloops uses component TR222 in one of its products. Kamloops adds $95 of variable costs to the component and sells the final product for $455. Consider the following independent situations: Vancouver can sell all 150,000 units of TR222 on the open market at a price of $245 per unit. Kamloops is willing to buy 15,000 of those units. What should the transfer price be? Transfer price $ per unit Of the 150,000 units of component TR222 it can produce, Vancouver can sell 105,000 units on the open market at a price of $245 per unit. Kamloops is willing to buy an additional 15,000 units. What should the minimum transfer price be? Of the 150,000 units of component TR222 it can produce, Vancouver can sell 120,000 units on the open market at a price of $245 per unit. Kamloops is willing to buy an additional 45,000 units. What should the transfer price be? (Round answer to 2 decimal places, e.g. 52.75.)
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