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The Bathtub Division of Swifty Plumbing Corporation has recently approached the Faucet Division with a proposal. The Bathtub Division would like to make a special
The Bathtub Division of Swifty Plumbing Corporation has recently approached the Faucet Division with a proposal. The Bathtub Division would like to make a special "ivory" tub with gold-plated fixtures for the company's 50 -year anniversary. It would make only 6,100 of these units. It would like the Faucet Division to make the fixtures and provide them to the Bathtub Division at a transfer price of $191. If sold externally, the estimated unit variable cost would be $175. However, by selling internally, the Faucet Division would save $6 per unit on variable selling expenses. The Faucet Division is currently operating at full capacity. Its standard unit sells for $61 per unit and has variable costs of $44. Compute the minimum transfer price that the Faucet Division should be willing to accept. Minimum transfer price $ Should they accept this offer? They this offer
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