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Please show the working for the answers. Thanks! Metrical Corporation has two divisions: X and Y. X produces and sells a gear assembly used by
Please show the working for the answers. Thanks!
Metrical Corporation has two divisions: X and Y. X produces and sells a gear assembly used by the automotive industry in electric window assemblies. X is currently selling all of the units it can produce (25,000 per year) to external customers for $25 per unit. At this level of activity, X's per unit costs are: Variable: Production $7 SG&A 2 Fixed: Production 6 SG&A 5 Y Division wants to purchase 5,000 gear assemblies per year from X Division. Y Division currently purchases these units from an outside vendor at $22 each. a) What is the maximum price per unit that X can charge Y? b) What is the minimum price per unit that X Division could accept from Y Division for 5,000 units of the gear assembly and be no worse off than currently? c) Should Metrical Corporation let the transaction between Y and X to purchase 5,000 units happen? Explain your answers with analysis and/or calculation Step by Step Solution
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