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Required information Skip to question [ The following information applies to the questions displayed below. ] Washburn Associates has two divisions. Western Division, which has
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The following information applies to the questions displayed below.
Washburn Associates has two divisions. Western Division, which has an investment base of produces and sells units of a product at a market price of $ per unit. Its variable costs total $ per unit. The division also charges each unit $ of fixed costs based on a capacity of units.
Eastern Division wants to purchase units from Western. However, it is willing to pay only $ per unit because it has an opportunity to accept a special order at a reduced price. The order is economically justifiable only if Eastern can acquire Westerns output at a reduced price.
Required:
What is the ROI for Western without the transfer to Eastern?
Note: Round your final answer to decimal places.
What is Westerns ROI if it transfers units to Eastern at $ each?
Note: Round your final answer to decimal places.
What is the minimum transfer price for the unit order that Western would accept if it were willing to maintain the same ROI with the transfer as it would earn by only selling its units to the outside market?
Note: Round your final answer to decimal places.
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