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please answer all questions Aulman Inc. has a number of divisions including a Furniture Division and a Motel Division. The Motel Division owns and operates
please answer all questions
Aulman Inc. has a number of divisions including a Furniture Division and a Motel Division. The Motel Division owns and operates a line of budget motels located along major highways. Each year, the Motel Division purchases furniture for the motel rooms. Currentiy, it purchases a basic dresser from an outside supplier for $50. The manager of the Furniture Division has approached the manager of the Motel Division obout selling dressers to the Motel Division. The fu product cost of a dresser is 529 . While the Furniture Division has been operating at capacity (50,000 dressers per year) and selling them for $50 each, it expects to produce and sell only 40,000 dressers for $50 each next year, The Furniture Division incurs variable costs of $12 per dresser. The Motel Division needs 10,000 dressers per year; the Furniture Division can make up to 50,000 dressers per year. The company policy is that all transfer prices are negotiated by the divisions involved. Required: 1. What is the maximum transfer price? 5 Which division sets it? 2. What is the minimum transfer price? Which division sets it? 3. Suppose that the two divisions agree on a transter price of $33. What is the benent for the Furniture Division? For the Motel Division? For Aulman Inc. as whole Step by Step Solution
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