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Schwartz Corporation has two divisions, S and T. Division T makes a timer which has the following data per timer: variable cost $15/unit fixed cost
Schwartz Corporation has two divisions, S and T. Division T makes a timer which has the following data per timer: variable cost $15/unit fixed cost $10/unit (based on the monthly capacity of 12,000 timers) selling price $30/unit (to outside customers) Presently division S is buying 5,000 timers per month from an overseas supplier at $27 each, and Division Tis selling its entire capacity of 12.000 timers per month to outside customers. Division T is considering selling 5,000 timers per month to division S. Division T has no cost savings when it sells to S. 1. From the standpoint of division S, what is the maximum acceptable transfer price for the timers from division T? a $15/unit b. $25/unit c. $27/unit d. S30/unit 2. From the standpoint of division T, what is the minimum acceptable transfer price in order to sell 5.000 timers to division S? a. S15/unit b. S25/unit c. $27/unit d. S30/unit
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