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Textron Inc. has two divisions, Kelly Aerospace, and Cessna Aircraft. The company is attempting to negotiate a transfer price for Kelly's aircraft magnetos sale to
Textron Inc. has two divisions, Kelly Aerospace, and Cessna Aircraft. The company is attempting to negotiate a transfer price for Kelly's aircraft magnetos sale to Cessna. Given the following data, calculate highest acceptable transfer price. Kelly Aerospace Kelly annual production capacity Kelly's annual sales to outside customers Variable cost per magneto Fixed cost per month Kelly's selling price to outside customers Cessna Current purchase price from other supplier Annual usage 43,500 magnetos 41,000 magnetos $68.00 $220,000 $80.00 per magneto $80.00 per magneto 3.500 magnetos
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