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The Blossom Company is a multidivisional company. Its managers have full responsibility for profits and complete autonomy to accept or reject transfers from other divisions.
The Blossom Company is a multidivisional company. Its managers have full responsibility for profits and complete autonomy to accept or reject transfers from other divisions. Division A produces a sub-assembly part for which there is a competitive market. Division B currently uses this sub-assembly for a final product that is sold outside at $960. Division A charges Division B the market price of $560 per unit of the part. Unit variable costs are $424 and $480 for Divisions A and B, respectively. The manager of Division B feels that Division A should transfer the part at a lower price than market because at market, Division B is unable to make a profit. (a) Your answer has been saved. See score details after the due date. Calculate Division B's contribution margin if transfers are made at the market price, and calculate the company's total contribution margin. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Division B's contribution margin $ Company's total contribution margin \$ Attempts: 1 of 1 used (b) Your answer has been saved. See score details after the due date. Assume that Division A can sell all its production in the open market. Should Division A transfer the goods to Division B? The transfer be made. If so, at what price? Attempts: 1 of 1 used Assume that Division A can sell only 500 units externally at $560 per unit out of the 1,000 units that it can produce every month. Assume also that a 20% reduction in price is necessary to sell all 1,000 units each month. Should transfers be made? If so, how many units should the division transfer and at what price? (Round price per unit to 1 decimal place, eg. 52.7.) units at
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