TB MC Qu. 15-86 Martin Company currently manufactures... (PLEASE INCLUDE CALCULATIONS)

Martin Company currently manufactures all component parts used in the manufacture of various hand tools. The Extruding Division produces a steel handle used in three different tools. The budget for these handles is 127,000 units with the following unit cost.

Direct material	$	0.74
Direct labor		0.47
Variable overhead		0.31
Fixed overhead		0.35
Total unit cost	$	1.87

Polishing Division purchases 27,000 handles from the Extruding Division and completes the hand tools. An outside supplier, Venture Steel, has offered to supply 27,000 units of the handle to Polishing Division for $1.81 per unit. The Extruding Division currently has idle capacity that cannot be used. If Martin would like to develop a range of transfer prices, what would be the minimum transfer price that Extruding would be willing to accept?

$1.52.

$1.81.

$1.87.

$1.21.

TB MC Qu. 15-86 Martin Company currently manufactures... Martin Company currently manufactures all component parts used in the manufacture of various hand tools. The Extruding Division produces a steel handle used in three different tools. The budget for these handles is 127,000 units with the following unit cost. $ 0.74 0.47 0.31 0.35 Direct material Direct labor Varlable overhead Fixed overhead Total unit cost Polishing Division purchases 27,000 handles from the Extruding Division and completes the hand tools. An outside supplier, Venture Steel, has offered to supply 27,000 units of the handle to Polishing Division for $1.81 per unit. The Extruding Division currently has idle capacity that cannot be used If Martin would like to develop a range of transfer prices, what would be the minimum transfer price that Extruding would be willing to accept? $1.52 $1.81 $1.87 $1.21