Soft Cushion Company is highly decentralized. Each division is empowered to ma s. The Assembly Division can purchase stuffing, a key component, from the Production Division or from external suppliers. The Production on or from external suppliers. The Production Division has been the major supplier of stuffing in recent years. The Assembly Division has announced that we suppliers will be used to purchase the stuffing at $45 per pound uscu to purchase the stuffing at $45 per pound for the next year. The Production Division recently increased its unit price to $55. The manage uy increased its unit price to $55. The manager of the Production Division led the following information - variable cost $40 and fixed cost $8 ---to top management in order to attempt to force the Assembly Division to purchase the stuffing internally. The Assembly Division purchases 20.000 pounds of stuffing per month. What would be the monthly operating advantage (disadvantage) of purchasing the goods internally, assuming the external supplier increased its price to $82 per pound and the Production Division is able to utilize the facilities for other operations, resulting in a monthly cash-operating savings of $34 per pound? A) $1,689,200 B) $865,200 (C) $(164,800) D) $(206,000) Based on the original information and assuming that Production Division has ample capacity, what is the minimum transfer price Production would be willing to accept and the maximum price Assembly would be willing to pay? A) $40.00, $55.00 B) $58.00, $55.00 C) $48.00, $82.00 D) $58.00, $82.00 Based on the original information and assuming that Production has a total capacity of 50,000 pounds of stuffing. They currently have external orders of 35,000 pounds selling for $60 per pound. If Production fills all of the orders from Assembly, what is the minimum transfer price Production would be willing to accept? A) $40.00 B) $45.00 C) $58.00 D) $60.00 Soft Cushion Company is highly decentralized. Each division is empowered to ma s. The Assembly Division can purchase stuffing, a key component, from the Production Division or from external suppliers. The Production on or from external suppliers. The Production Division has been the major supplier of stuffing in recent years. The Assembly Division has announced that we suppliers will be used to purchase the stuffing at $45 per pound uscu to purchase the stuffing at $45 per pound for the next year. The Production Division recently increased its unit price to $55. The manage uy increased its unit price to $55. The manager of the Production Division led the following information - variable cost $40 and fixed cost $8 ---to top management in order to attempt to force the Assembly Division to purchase the stuffing internally. The Assembly Division purchases 20.000 pounds of stuffing per month. What would be the monthly operating advantage (disadvantage) of purchasing the goods internally, assuming the external supplier increased its price to $82 per pound and the Production Division is able to utilize the facilities for other operations, resulting in a monthly cash-operating savings of $34 per pound? A) $1,689,200 B) $865,200 (C) $(164,800) D) $(206,000) Based on the original information and assuming that Production Division has ample capacity, what is the minimum transfer price Production would be willing to accept and the maximum price Assembly would be willing to pay? A) $40.00, $55.00 B) $58.00, $55.00 C) $48.00, $82.00 D) $58.00, $82.00 Based on the original information and assuming that Production has a total capacity of 50,000 pounds of stuffing. They currently have external orders of 35,000 pounds selling for $60 per pound. If Production fills all of the orders from Assembly, what is the minimum transfer price Production would be willing to accept? A) $40.00 B) $45.00 C) $58.00 D) $60.00
